$10000 to $22930 in six months GBPUSD breakout

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Hi everyone

Although this is my first post on this forum, I am not completely new. I have been watching, learning and observing for several months while I was getting ready with my trading plans etc. I am new to trading but have gained some knowledge through loads of books and demo trading, and of course many interesting threads here for which I should thank all of you. I have learnt a great deal from here from some of you.

I just left my job , had enough of it and have decided to give it a go with trading forex. I have given myself 6 months to have a reasonable income through trading having strict MM rules and working only on a few strategies which work well for me. I have been working on in for the last 4-5 months quite consistently.

And hence I started testing some strategies which I found matched the most to my personality. I bought the forex tester ( it seems to be quite a nice tool to practice and test, if some other fellow members think otherwise, I am open for suggestions/comments).
After spending days on many strategies I have come to a conclusion that using too many indicators just does not work for me. Most of them are lagging and eventually having the knowledge of readin PA through charts is probably the best way to make a successful trading career. And of course there is no holy grail as such as you have to not only find a way which works for you but also you have to master it before you go live. While doing this I came across the London breakout strategy. I am not sure if someone else has done this the way I did , but the results from Feb to end of july were amazing. My rules were very simple.

  1. London market opens at 8 o clock which is GMT+1 in the summer. I am in London so that is not a problem for me. I tested this on the 15 min chart only on GBPUSD.
  2. Every day at 8:15 (when the 8:00 candle on 15mins TF closes) I placed an entry order for short and long on both sides.
  3. I put a buffer of about 5-10 pips. I did not keep any specific rule for the entry point. I used visual interpretation and kind of common sense. Depending on the market volatility and the current ATR. And also looking at the previous candle how they were behaving.
  4. My account size was 10k to start with and my SL was 20 pips both sides. The ATR for 15 mins TF on GBPUSD moves between 15-25 pips. And hence I decided to make the SL at 20.
  5. My position size was 1 lot which in money is $10, hence I was risking 2% on each trade (20*10=$200). Now some of us would think that it should be 4% as I am setting two orders and the possilbility of loosing both does exist. Yes that’s right , but again the possibility of gaining on both trades also exist doesn’t it?
  6. Now this one is probably not gong to be liked by some of us here. I did not look at any S/R levels, did not make any Fib lines , did not look at higher TF charts to ascertain the trend , nothing, just blindly went on and placed a trade everyday Mon to Fri no matter what. Even if early morning before my trade a rally had started and the candle had gone way up or down, I still put a trade just to see what happens.
  7. After the trade triggered, I go on 5 mins and look whats happening. I trail my SL in a way that it always is at 20 pips and I follow the candle every five minutes.
  8. Exit was strictly by hitting stop loss and even though sometimes I know that the price is reaching an S/R level, I did not close the position. So every time my order was closed I would loose 20 pips if I was going in profit.
  9. If one of the order triggers, and whether or not it is a loss or gain, I keep the other order open till 11AM. More often than not , just before 11 AM there would be a big move again. So either I would make up for a loss from the first trade or would make more. The second order was strictly only till 11AM and was cancelled after that if not triggered.

The result is astonishing. I started testting this on 2nd Feb till end of July. There were good and bad months, but overall it worked out pretty good. Now the way I did was probably more gambling than trading. My point is, that now having the data from the trading , this could be refined and made more profitable I guess. The testing results overall were as follows:

Days processed 179
Months processed 5.97
Total trades 194
Profit trades# 85
Loss trades 109
Trades/day 1.08
Trades/month 33
Profit trades/month 14
Loss trades/month 18
Max profit trade 1820
Max loss trade 200
Net profit 12390
Gross profit 28390
Gross loss 15460
Profit/month 2167.04
Average profit 334
Average loss 141.83
Max drawdown
Profit factor 1.84
Return, % 129.3
Max lot used 1
Profit probability, % 44
Loss probability, % 56

I am also attaching the excel file with each trade. As we can see that although there were more loss trades than profit ones, the max lost was $200and the max profit was almost 2k. From my visual memory, I can recall that if I would have considered S/R, trends from higher TF, candle stick patterns or other patterns forming on the charts, this could be definitely refined. I am going to amend the rules next time and do another one with slightly different approach.

I know this is not a new strategy and I also know that this has been discussed many times , but I could not find a thread with proper analysis and actual trade example with statistics of success or failure rates.

Now to the masters of trading on this forum , correct me if I am wrong, but I think that if refined , this strategy could give better results than 20% monthly returns on your account. I would love to hear some comments, negative or positive about this. I understand very well that past performance is not a gaurantee for future success, I also take into account that when you go live you behave differently and the emotion factor needs to be taken into account. Also , the news and daily fundamentals. But overall it is quite surprising that just 3 hours work could potentially keep you going.

I look forward to hear from some of the experts, any comments would be highly appreciated. Any twists, turns, amendments to refine this would also be welcome. I am going to start live within a month or so with a 5-10k account. If you think I will loose all of it with the above strategy , please let me know :slight_smile: :slight_smile: LOL

Thanks for reading

GBPUSD 8 o clock strategy one.zip (25.4 KB)

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“bad months and good months”? So I bet your bad months were just before the pound started going up, up and up… even a monkey could have made money in that market condition…

“I look forward to hear from some of the experts” - you are on the wrong forum!

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I dont think I wrote anything to get such a reaction from you fbxnet. I dont understand what upset you so much. Before comparng me with a Monkey, go through the excel file and see the results. You can place the trades as they are and you will get the same . And I did not make any money on this as this was just a test result. Profits were made both on long and short so GBP going up does not have to do anything with this. By the way GBP was going up throughout the long term period of the test and on a TF of 15 minutes that does not mean much.

London breakout is a popular strategy and I just tested it in my own way.

Some respect for fellow members please !

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This method you’re working on is, as you say, well known under different names such as London open, etc.

The technique is based on creating a “box” and then trading the breakouts in either direction from that box. There are as many versions as there are traders is my guess.

I’m familiar with this method although work and such make it impossible for me to be present to trade during these hours.

Box breakouts offer some of the best risk to reward ratios you can get in trading, so it’s definitely a worthwhile trading style.

The beauty is in the details such as close the other when one gets hit? and many other trade management issues.
You seem to have put some effort in to this and I assume you’ve come across this: London Open Breakout-M30 @ Forex Factory

Otherwise check it out. I think the big dog break out is the major thread but I’m sure it’s all worth a read.

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Hey Kadziu,

Thanks for posting your system. Can I just say it’s nice to read a post
where someone explained their system in a way which:

(1) uses proper English
(2) explains all aspects of the system
(3) shows the complete data of their actual results

This puts you in the top 1% already! :slight_smile:

But really, thanks for posting the system. I’ve been checking out several
different systems like this one. I’ll keep yours in mind.

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Thank you very much indeed for the reply, I will go through the threads you mentioned and try to adapt and fine tune into my way :slight_smile:

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Hi Wheaty,

Thanks for the comments. Please be aware that this is still not a system. This was just a raw experiment to see what happens if we take out the “when x crosses y, enter” kind of rules. I posted the thread as I was amazed by the result and the simplicity of it. At this stage it would be dangerous to jump in live. I am now analysing the data from the six months and getting other kind of reports which will hopefully help me fine tune the system in my way.

From the data I have, I got the following results :
Profit per day

Monday 4540
Tuesday 980
Wednesday 1500
Thursday 3870
Friday 2040

Profit per month

February 3430
March 2450
April 1280
May 430
June 3470
July 1880

I am working on a spreadsheet which will give me the following answers:

  1. How many times did both the orders make a loss
  2. How many times did both make profit
  3. How many times did the second order cover the loss of the first

and so on

Additionally , I want to go back and see what happened when I bought on resistance and sold on support, what was the trend on higher TF charts , 60 min and 4H, and whether or not the profit was made in the direction of the trend, if yes how many times etc.

This and hopefully some more information from fellow members would help me to formulate a strategy which will suit my needs. The good thing in the experiment was that it made profits consistently and that the risk was just 2% of the account. The profits were fairly higher than the risk taken, however there were too many trades which resulted in a loss, and this is what needs attention. To minimize it even further.

If we fine tune this way of placing orders with S/R lines, trendlines, looking at candle stick patterns and other factors , we should be able to make even more profit, isnt it ? That was what I was looking comments on and that was the whole idea behind this thread.

I am now working on another test from Jan to Aug , so 8 months, trying to add a few more things which will come out of the analysis from the first one.

We will see where this takes us.

Thanks for reading.

8

Hi

The excel file did not open for me.

Can you break down your win/lost ratio per day of the week. I am curious to see if Monday was your most successful day and how the other days pan out in consistency.

-Prop

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Whatever happened to the development of this thread?

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Why don’t you continue with this thread ? It seems interesting to me.
Are you still trading this system today ?
Appreciate your reply and Happy Trading always
veryspecial1

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This is one of the best methods I ever trade, but my version is pinned on Newyork open, which overlaps the London session to create the highest volume in the day. strict mechanical entries generate good R/R ratio, whether back- or forward- testing, even in non-trending market, for less than 100p intra-day positions. For larger positions like 140p and above, entry during these session volume highs ( 0700-0900gmt & 1300-1500gmt, 1600 is late) ensures that the trade jumps into moving price action positive difference immediately, sort-of a graceful entry.

I never really made money until I switched off ALL indicators - now that I learned to do without them I can use any without getting lost. Tell me you spat on your boss’s desk and told him the truth? Keep yo head up!

1 Like
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Yea, I’d agree; this sort of “break out” strategy was one of the profitable methods that I used during my earlier months. However, based on your statement, I believe you are under EST? Because I am, and I’ve always wanted to modify the London Breakout Strategy in some ways that would allow me to trade more efficiently with more profit. Mine wasn’t as elaborate:

  1. Currencies: EUR/USD, GBP/USD, and GBP/JPY
  2. Timeframe to lookout for: between 9am and 12pm EST
  3. Chart Time: 15 min or 1 hour
  4. Detect a prevailing trend and enter according to the price direction.
  5. S/L: at the high/low of the previously closed candle, or 2% of my capital, which ever is lower. Depending on the situation, I’d also consider placing a S/L at the previous peak/bottom.
  6. T/P: Set profit target at major fib levels (mostly 38.2 or 61.8), previous high/low, or other major “psychological” levels (i.e. price level of 00).
  7. Do not enter: when price is moving sideways or 30mins prior and after any major news announcement.
  8. Exit: When trend is reversing or when a price reveral pattern that runs counter to my trade is detected. In some rare cases where my trade was open until NY closing, I’ve exited with small profit.

If you don’t mind, I’d like to hear more about your version of the trading method.

Thanks!

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thanks for the in-sight - ive spent 8 months finding a system thats right for me and im still back testing it - but good luck
Forex wales - Cardiff

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I’m +3gmt. I got the method(s) from around too. Basically relies on volume increasing during the peak market monemts - so I switch on ‘volumes’ (see mt4) preferably h1 timeframe; see how the three peaks in volume are such that 0000-0100gmt is Asian high (more evident for EY, it never stops for the night), then 0700-0900 London Open, then the highest at 1300-1500 London - New York overlap which is the highest. Someone really geek over at FF called this overlap The London Rush as the name for her very briliant method … which later went on sale!

Try to observe how during these peaks price makes its largest moves. If a new trend is established, then it happened during London session, or reversal bars form just before peak moment begins or during the 1000gmt or other slack, then the E$ and G$ take off with GY in hot pursuit at 1345-1400 onwards. At 1600 that wick/master candle forms and the market parks for the evening. EY is slow and steady while GY does those breakouts. You don’t want to miss Wed & Thu, and possibly Fri morning. The volume thing is clockwork - if nothing happens, still the longest candles ride the larger volume monents. Something with 30 minutes before London or New York opens, volatility increases sharply.

My current favourite rendition is the volume pattern on h4 frame? If anything will happen in a day, it shows as one corner on h4, or some reaction after retesting a pivot/swing or s+r level. PA on h4 and above is more reliable and hiding stops two or so bars behind price in steady trend works well here than on h1. So I am at my station before 1100 local/0800gmt, most times very unsure about the market after an hour of analysis, I place a straddle which is R away from current price both ways, usually 140p or less apart, once in and securely 50p into it anything can happen. If a h1 bar starts to pull a very fast one on me on peak volume, or it closes with the volume peak pointing in the wrong direction, then I jump out to regroup at a better position’ or invert hurriedly depending on the momentum. When something breakout starts to happen it shows on E$ and G$ first (bet it happens earlier on the stocks indices?) so that if I miss it there by 1hr I’m sure to catch some of it on EY and GY.

Other dynamics and considerations will be involved but that gives an added edge. Mechanical entry and exit is best with this method, though experienced discretion is aquired soon afterwards. Nowadays I base my trading on other mainstream methods, but I can still swear by the London-Rush phenomenon.

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I like break outs and seeing as this is old I wonder if anyone still uses it though