HERE IT IS!!!
This is a great strategy for people like me who work a full-time day job, and live in America, or other time zones, where it's tough to trade the whole London session. I can get up for about 5-10 minutes in the middle of the night, set my trades, and go back to sleep...wake up and see what happened. This is very easy to visually backtest for yourself to see the results. I would call it the breakout of the breakout, because the trend often changes after this time in the London session, and this will catch the inevitability of that change.
Time Frame: 1 Hour
All trades opened from bid side chart
*****Please see the EDIT below, as while I left this first post intact, I use a modified version, detailed in the EDIT*****
1.Wait until the first full hour of the London open is about to finish, 5-10 minutes before the candle closes.
2. Place a buy stop 3 pips above the high of the candle that is about to close, with TP of 4 pips, with the SL at the candle's low, or 30 pips, whichever is less.
3. Place a sell stop at the low of the candle with 7 pip TP, and SL at 3 pips above candle's high.
4. Leave orders open until they close themselves, often, later in the day, the other order gets triggered and statistically is successful, except for Fridays, I never leave positions open over the weekend, close trades at your discretion on Fridays.
Now, while this has high probability in wins, the losses would wipe out 2-3 days of wins, so a second order needs to be placed a same locations as the first ones, but with different SL, and TP settings to catch and ride the trend. Start with the SL the same as above instructions, so that when it's hit, you catch the breakout going the other way. Then, the TP needs to be more than the distance in pips from the top to the bottom of the candle, for good RR, but close enough to have high probability of getting hit. Trailing the stop is good, but just know the price often retraces to the end of the candle it broke from as a retest, so BE stops almost always get taken out. This is the part which I am still experimenting, and welcome any input, help, trying your ideas to make this very profitable, because it can be. It is very possible to end every day for a month in profit, despite a loss every once in a while in between successful trades.
As far as psychological analysis of this method, most other London breakouts focus on the few hours before the London open, while this one waits until almost an hour after the session has already started, and there is still a lot of daily range potential, so it is inevitable for a break at least in one direction, but statistically it's actually hilarious how many times the price breaks above for a quick 7 pip TP, then goes the other way to hit the other TP, usually going on for 30, 60, 100 pips as part of the trend start the london open is famous for. Look at July's chart history to see what happened after this candle each day, it's crazy. July only had 3 losses with this method. Statistically, the price is going to be far away from one of the ends of this candle as time goes by, almost all of the days of a given month, so this method takes advantage of better probability afforded by waiting a little later for breakouts.
So, backtest it for yourself, demo it, see if you find a great area of TP for consistent wins from the 2nd contract trades. Also, this should be super easy to code into an EA for those who don't want to even get up for 10 minutes in the middle of the night, and and EA would make backtesting the 2nd contract part of the strategy much less time-consuming.
I have not seen much success backtesting this with other pairs, but you can try for yourself, if you like.
Yes, I know the actual realized profit for the first part of the strategy is different for the buy, than the sell, but that's because it's statistical for maximum win percentage...usually there is about 10 pips in the account by time the next session rolls around.
EDIT: I have tried some settings as far as "second contracts"...
I actually had three orders in each direction with an initial SL same as the opposite direction's stop entry order, and with 20, 40, and 60 TP, with a 20 pip Trailing stop. I would leave these orders open throughout the day until late in the Asian session to let them play out. This was pretty successful, but when the SL was hit, it was all three trades hitting the loss, and not that great of risk\reward ratio...so, I'm now using only one entry in each direction with a 30 pip TP and maximum SL of 30 pips, if the reference candle is longer.
Thanks to crisscross for making an EA, which now has many features available to tweak settings, so you can test to your heart's desire. You'll have to find it in the thread yourself, as there are updates, and discussion, in which you are welcome to participate.
Let's compound the pips, guys (and gals)