London Breakout 1

muthusai2000 · December 22, 2009, 2:28am

Hi R Carter,

Thank you so much. I am just getting the feel of this system. Long way to go before I master.

Regards,

Muthu.
Chennai.
India.

muthusai2000 · December 22, 2009, 2:34am

muthusai2000 · December 22, 2009, 2:35am

Regards,
Muthu.
Chennai.
India.

poca · December 22, 2009, 9:54pm

From reading through the pages it seems like muthusai is using a different time frane. I’m not sure of this at all which is why i attached a picture. My program is on NY time. And this is the way the trade would of looked to me on the 22nd. and buy meant sell. gahhhh

xtraction · December 22, 2009, 10:13pm

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

Interesting. Have you ever traded the Asian Session Breakout?

Trade the break of the Asian session high or session low. Simple rules, big profits.

TalonD · December 22, 2009, 10:20pm

Looks to me like you’ve got the times about right. Sell is right, that was a good 5o or 60 pips gain. Finally I have a chance to trade this breakout

poca · December 23, 2009, 9:06am

Muthu did you find using an earlier time worked better? What 5 hour box are you using. I cant figure it out…

muthusai2000 · December 24, 2009, 12:18am

Hi,

I am not following the rules strictly and i am trying to make the most of an early break out as you have rightly said. Most of the time i try to draw my trendlines at the close of the candle which is 1 hr before euro open. Yesterday’s trade failed. I will post the chart soon.

Regards,
Muthu.

muthusai2000 · December 24, 2009, 12:22am

Regards,
Muthu.
Chennai.
India.

muthusai2000 · December 24, 2009, 3:03am

muthusai2000 · December 24, 2009, 3:05am

After Exit

Regards,
Muthu.
Chennai.
India.

muthusai2000 · December 29, 2009, 2:31am

muthusai2000 · December 29, 2009, 2:34am

A huge move is happening just as i post. My exit was early but still good enough for me.

Regards,
Muthu.
Chennai.
India.

TalonD · December 29, 2009, 8:38am

hey Muthu, how about showing me a picture of your GBP/USD chart?

muthusai2000 · December 29, 2009, 2:09pm

Hi TalonD,

The candles were too dwarfed and i was not able to fix a valid swing high of yesterday to today’s. Hence i did not trade today’s cable. This is how my chart looked and the possible entry and exit areas for a long trade are marked as white circles. It never looked convincing enough (the way i drew trend line) hence i stayed away from it.

Regards,
Muthu.
Chennai.
India.

muthusai2000 · December 30, 2009, 1:34am

muthusai2000 · December 30, 2009, 1:36am

Regards,
Muthu.
Chennai.
India.

TalonD · December 30, 2009, 9:09am

the lines on my EUR/USD chart don’t look like yours. Which candles are you using?

muthusai2000 · December 31, 2009, 1:55am

The trade for yesterday was off the open of 0600 candle.

muthusai2000 · December 31, 2009, 2:00am

There was no way i could ever draw a trend line using the mini soldiers that were in formation. Hence, i decided today to try something new. The thick red horizontal line you see is a mini resistance. R1 was just above it. My order was placed just above R1. Profit target was R2. Entry got triggered. Lets have a look at how the trade goes.