London Breakout 1

[R Carter]

London Breakout 1

This London Breakout strategy has a win ratio of over 90%.

Currency pair: GBP/USD, EUR/USD - tested. Other pairs may also be used.

Time frame: 1 hour

Indicators: none

At this point it might be an idea to bring up the chart at the bottom of this post and read the strategy whilst looking at the chart.

Trading setup:

For this Forex system to work properly a trader needs to know the basics of drawing trend lines and be able to identify support and resistance lines.

Our working range includes 5 candles: from midnight to 04:00 EST (including the 04:00 candle).
Optional: draw a midnight vertical line for visual aid.

With those 5 candles look for valid swing high and swing low of the price.
Draw a downtrend trend line connecting a found swing high to the most recent swing high of the previous days (make sure the last one is a valid high to draw a downtrend trend line through it).
Do the same for a swing low: connect it to the most recent swing low of the previous days, make sure you are putting in the right trend line using the rules of drawing uptrend trend lines.

If a trader sees, for example, no swings high in the 5 candle range, that means there will be no downtrend trend lines this morning.

The Entry is on the break of either one of the two trend lines and is immediate without waiting for a current candle to close. A protective stop is placed just above/ below the candle that broke the trend line.

Profit target:

Usually the whole trade will unfold within the next three candles (count in the candle that broke the trend line).
So, after the actual breakout we have 3 hours or 3 candles to trade, after that we will exit the trade with whatever profits are made.

Main rule- Using S/R + timing:

Profit target is going to be the nearest level of support or resistance according to the S/R lines.
If, however, after only one candle this target is reached, it suggests a very strong market, we would therefore stay in the trade and set our goal for the next support/ resistance level. We would also choose the second S/R level as our profit goal if the first S/R level appears to be close to our entry point.
We have three candles to trade after the breakout, thats why we can trade calmly and allow our goal to shift to the next S/R level.

It is at the traders absolute discretion whether to set the target at the nearest S/R level and exit the trade once the target is hit or use 2 or 3 consecutive candles.

Another simplified option would be with fixed targets and timing.

For example, EUR/USD target = 20 pips - spread. GBP/USD = 40 pips - spread. These are only suggestions. For other currency pairs you will need to back or forward test.

Thats it! Properly applied this London breakout strategy is more than 90% effective.

Good luck and good trading - Robert.


Thanks to: Edward Revy

[TalonD]

Thanks R.C. I'll give this a try... I can see some late nights / early mornings coming up

[Firstfx]

Sounds interesting.

London forex markets kick off at 3 am EDT so this is more of follow through London break out strategy as your instruction entail entering a trade just after 5 am EDT (end of 4 am EDT 1 hour candle), right?

[R Carter]

Originally Posted by Firstfx

Sounds interesting.

London forex markets kick off at 3 am EDT so this is more of follow through London break out strategy as your instruction entail entering a trade just after 5 am EDT (end of 4 am EDT 1 hour candle), right?

Firstfx

Good point. No the breakout strategy is London open.

You may need to adjust the time + or - 1 hour for 'British Summer time'. Apologies for the confusion.

[Firstfx]

Originally Posted by R Carter

Firstfx

Good point. No the breakout strategy is London open.

You may need to adjust the time + or - 1 hour for 'British Summer time'. Apologies for the confusion.

I am a little confused here. Currently London opens at 3 am EDT (7 am GMT or 8 am London time). Which means that if you want to be ready for the London open you need to base your lows/highs on the 2 am EDT one hour candle (which ends at 2:59 am EDT), last 1 hour candle before London open. However you are basing your lows/highs on the 4am EDT one hour candle (ends at 4:59 EDT). That is a difference of 2 hours and not + or - 1 hour.

I understand what you are doing and it appears to be a very good idea however I am not too clear on you timing for price determination.

Is your trade entry "start" point supposed to be at time of London of London open (3 am EDT)? If yes than you need to change your price determination's ending period time from 4 am EDT to 2 am EDT.

[TalonD]

time zones still confuse me. I'm in EDT eastern daylight time, but the time change will be coming up soon and we'll be back in standard time.


I wouldn't mind seeing a few more pictures as examples.

[cas]

Isn't the best time for a London breakout between 7am and 9am GMT...?

In that case advertised candles in EDT timezone are correct.

Please correct me if I'm wrong.

[d-pip]

Spin back a month or two on the GBP 1H chart and look at the price action during the first few hours of the London market. I think you’ll see that this strategy is different that the very popular “overnight” and “London open” period break-out. It seems to take place after the London bulls & bears have fought it out and a clear winner emerges and runs with the ball - lots of days around 8:00 to 9:00 gmt (4:00 to 5: 00 est). It looks good to me, I’ll be trying it in the morning!

thanks for the strat Mr r carter

[matlobien]

Originally Posted by R Carter

London Breakout 1

This London Breakout strategy has a win ratio of over 90%.

Currency pair: GBP/USD, EUR/USD - tested. Other pairs may also be used.

Time frame: 1 hour

Indicators: none

At this point it might be an idea to bring up the chart at the bottom of this post and read the strategy whilst looking at the chart.

Trading setup:

For this Forex system to work properly a trader needs to know the basics of drawing trend lines and be able to identify support and resistance lines.

Our working range includes 5 candles: from midnight to 04:00 EST (including the 04:00 candle).
Optional: draw a midnight vertical line for visual aid.

With those 5 candles look for valid swing high and swing low of the price.
Draw a downtrend trend line connecting a found swing high to the most recent swing high of the previous days (make sure the last one is a valid high to draw a downtrend trend line through it).
Do the same for a swing low: connect it to the most recent swing low of the previous days, make sure you are putting in the right trend line using the rules of drawing uptrend trend lines.

If a trader sees, for example, no swings high in the 5 candle range, that means there will be no downtrend trend lines this morning.

The Entry is on the break of either one of the two trend lines and is immediate without waiting for a current candle to close. A protective stop is placed just above/ below the candle that broke the trend line.

Profit target:

Usually the whole trade will unfold within the next three candles (count in the candle that broke the trend line).
So, after the actual breakout we have 3 hours or 3 candles to trade, after that we will exit the trade with whatever profits are made.

Main rule- Using S/R + timing:

Profit target is going to be the nearest level of support or resistance according to the S/R lines.
If, however, after only one candle this target is reached, it suggests a very strong market, we would therefore stay in the trade and set our goal for the next support/ resistance level. We would also choose the second S/R level as our profit goal if the first S/R level appears to be close to our entry point.
We have three candles to trade after the breakout, thats why we can trade calmly and allow our goal to shift to the next S/R level.

It is at the traders absolute discretion whether to set the target at the nearest S/R level and exit the trade once the target is hit or use 2 or 3 consecutive candles.

Another simplified option would be with fixed targets and timing.

For example, EUR/USD target = 20 pips - spread. GBP/USD = 40 pips - spread. These are only suggestions. For other currency pairs you will need to back or forward test.

Thats it! Properly applied this London breakout strategy is more than 90% effective.

Good luck and good trading - Robert.


Thanks to: Edward Revy

Hi Carter

I also trade London breakout.

Can you post a chart of today's trade ?

Am I correct to say that the 5 candles are from 5 am to 9 am London time ?

Thanks for the system.

I will follow it with interest.

[R Carter]

Matlobien

Matlo = ex Navy man? Just curious.

Yes this breakout candle (number 5 candle) is the 09:00 GMT (London time) candle. As predicted its the 09:00 GMT candle that usually triggers a larger move followed by 2 more hour candles if its significant.

i will post a chart later.