London Breakout 1

[R_Carter]

[B]TalonD[/B]

Thanks for clearing that one up. :p:p:p

[d-pip]

except for today charts… back test looks awesome… hmmm…

I agree back test looks great but…
didn�t work out so well today - there�s always tomorrow$$$:D

[Dan89]

Thanks Carter for the strategy, sounds very interesting indeed.
I was wondering why would you have taken the trade at 9:00, if we need 5 candles, wouldnt you wait for the 9:00 candle to close before you enter? Sorry I am confused

I am aware that for London Breakout there are as many strategies as there are traders. However this one looks quite promising. I have been testing many ways for trading LBO on the FX tester for a month now, amending, bending, refining and changing rules. I have gone through the GU charts atleast 15 times from Jan to Aug 2009 testing various methods to come out with the best results. I will try this one and record each trade and see what we get. It would be interesting to see some data with ratios and probabilities.

Will soon post the results.

Kind regards

you draw the trendlines from the first swing high and swing low within the 5 candle range to the most recent swings on the previous day … no need to wait for the full 5 candles to close.

[perfoma]

[B]London Breakout 1[/B]

[B]This London Breakout strategy has a win ratio of over 90%[/B].

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

[B]Time frame:[/B] 1 hour

[B]Indicators:[/B] none

[B]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.[/B]

[B]Trading setup:[/B]

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.

[B]Our working range includes 5 candles:[/B] 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.

[B]The Entry[/B] 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.

[B]Profit target:[/B]

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.

[B]Main rule- Using S/R + timing:[/B]

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.

[B]Another simplified option would be with fixed targets and timing.[/B]

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

Thanks. Perfect Idea

[fayizal]

My chart for the day… got 30 pips…

Im taking highest high and lowest low of the previous day… will this affect the overall trade ??

[matlobien]

[B]Matlobien[/B]

Congrats on making the grade! Incidently you types always make great traders. You have the mentality to sit it out in a muddy ditch sometimes for weeks as required for advanced reccky and then make the decisive move. Perfect mentality for FX trading.

I get confused with all the different time zones plus add +/- an hour for daylight saving.

I’ll just say 09:00 GMT at whatever time of year it is… now! :D:D

No chart yet ?

I’m getting stiff waiting in this muddy ditch.

[d-pip]

matlobien

Here’s my GBP chart for this morning, don’t know if I’ve got it 100% right…but I think I’ve got the general concept. looks like it could be a profitable method $$$

Now I�ve got to figure out how to attach the pic file?

[R_Carter]

[B]d-pip[/B]

Nice chart. I also have no idea how to get a screen shot from the monitor to here. I can upload a picture but screen shot

I’ll get one of my sons to show me.

[red_ear]

RC

You need to use a image hosting website. I use imageshack but there are plenty of others. I’d post a link but I don’t think I’m allowed so you’ll have to google imageshack :o

On imageshack, browse to find the pic you want to upload and select “start upload!”

Once its uploaded, select “direct link to image” which should take you to your uploaded pic. Copy the website address containing your pic (right click your mouse and select copy.

Then on the post reply screen, select the icon that looks like a postcard which will prompt you to enter the website address of your pic. Just paste the entire address in that prompt (right click mouse and select paste) and voila…

…hopefully

[nutrader]

Looks like an interesting method, thanks for posting, and good to trade off PA alone. Just wondering are news releases taken into consideration with this strategy when trading cable as most uk news releases take place around 9 - 9.30 am london time which tends to trigger some big moves or is it these news releases that make this strategy so succesful

[d-pip]

Looks like an interesting method, thanks for posting, and good to trade off PA alone. Just wondering are news releases taken into consideration with this strategy when trading cable as most uk news releases take place around 9 - 9.30 am london time which tends to trigger some big moves or is it these news releases that make this strategy so succesful

I�m just going to try trading the trend lines and forget about the news… for now anyway!! :eek:

[R_Carter]

[B]Red Ear[/B]

I think I get that.

But my platform is not a website, its an on computer software program with a data feed.

The only way I have so far figured is to copy a screen shot into word and then post. I’m confident theres a better way but I’m old school and still regard computers as ‘Type writers’ with bells and whistles.

I also have a cell phone but don’t text? My reasoning is I don’t switch on the TV to listen to the radio. :D:D

[red_ear]

RC

Us mere mortals have software programs with a data feed but they have an option to save a chart as a picture!

Hopefully your pro set up should have something similar. eg MT4 has the option to save a chart as a picture under the file menu option.

Just save our chart to a memorable location and upload the pic to the imageshack website similar to the way you would attach something to an email by using the browse option.

On second thoughts maybe you should get one of your sons to demonstrate! If you’re as much of a luddite as you say, I imagine it’ll be like when I showed my folks how to use computers and the internet

[TalonD]

@d-pip

matlobien

Here’s my GBP chart for this morning, don’t know if I’ve got it 100% right…but I think I’ve got the general concept. looks like it could be a profitable method $$$

Now I�ve got to figure out how to attach the pic file?

R.C. in this image, are these the right hours and are the lines drawn from the right candle wicks? I want to make sure I’m doing it right too.

[R_Carter]

[B]TalonD[/B]

The set up is based on drawing in trend lines from the most recent low/ high from the previous day, so looks about right to me. But I notice that by the time PA had stepped outside the trend lines we had lost getting on for half the total pips. The system seems to be working and sticking to the rules you would still have gained a solid 80’ish pips. So must not complain.

But in todays case PA stepped outside the 1h upper boll and did a classic double wick and change of colour candle for a reversal. If you had followed that you would have taken almost all of that retrace… upper boll to lower boll! But this is outside of the breakout strat here.

[TalonD]

I just wanted to make sure I had the correct hour candles. those time zones will always confuse me. And wanted to make sure I was picking the highs and lows correctly, this chart was pretty close to mine.

most of that big down candle only took about 15 minutes, you’d have to be quick to catch it. I was asleep. when I got up at 6edt it was half way down and I got about 50pips just following the MAs.

[R_Carter]

[B]TalonD[/B]

Yep I missed it too! Still tomorrow is looking promising? PA is already between a 2:10 & 2:20 boll on the 1h as I write this.

[TalonD]

[B]TalonD[/B]

Yep I missed it too! Still tomorrow is looking promising? PA is already between a 2:10 & 2:20 boll on the 1h as I write this.

You’ll have to explain 2:10 ? 2:20 ? 2 std deviation and 10 period?

I may have to read your answer tomorrow though, going to call it a night. Got a sell going on with a trailing stop, going to leave it. not risking much on it though.

[d-pip]

I think one way to play this strategy is to pay more attention to the �trend line break� concept than the actual hours or candles. In other words, who knows if or when the break will come, so if your schedule permits, keep up dating the trend lines and be ready. Looks like Tuesday morning fayizal picked up some nice pips with an early EU break. If the strat works out today I�ll try to post the GBP chart.

[fayizal]

Looks like no real trade today… Lookout for EUR GDP news release…