This is not something new but rather is something I have stumbled across and made a few small changes along the way to suit my own trading style a little better.
Back-tested this and it has shown really good results over the last 6-12 months so I thought I’d share this with you all.
Once again, this is not 100% my own strategy, but rather something I found through research that has been around for a long time and just made changes to it to suit my own lifestyle and trading style.
The strategy is based on the good old “London Breakout Strategy”. It’s a very nice and clean way to trade, I use no other indicators other than the “Session” indicator and draw 2 lines and/or a rectangle box to determine the ranges.
Here are the rules:
- Candlesticks - 1H
- Plot the high and low of the last 3 candlesticks BEFORE the London market opens (refer to examples below)
- Once the London market has opened and the high or low of the range has been broken and the breakout candle has CLOSED, you enter a trade in that direction
- SL is at the opposite end (if BUY then set SL at the bottom of the determined range and vice versa
- TP is 1.5 R:R
- Risk is 1-2% of your account per trade
Note: What I usually do if I don’t have the time to monitor is to let the trade run all the way through until just before the US market closes. If your trade has not hit SL or TP by then, close the trade regardless of whether it is in profit or loss.
I currently use 6 currency pairs for this strategy: EURGBP, EURUSD, GBPJPY, GBPUSD, USDCHF & USDJPY.
Once again, this is what I personally do, and obviously, like anything in the trading world, it does not work 100% of the time but because of the 1.5 R:R, you only need to win 50% of the time and would still make decent returns over time.
Feel free to backtest this yourself and let me know if you have any feedback or changes that could potentially make it work better?
Here is why this works for me:
- Obviously, the backtest of results has shown to be very positive, demo traded this for about nearly 6 months and have been live trading this for about nearly 3 months now and have made nice returns weekly.
- I live in Australia, so to be able to trade this strategy, I just need to hop on to my charts at around 4:45PM, draw my ranges and check back every hour from 5PM onwards (6PM, 7PM, 8PM etc.).
- Once I have my breakout, I enter the trade and let it run and forget about it until the next morning, I’d wake up at about 6:45AM to check my trades and close off those that have not already hit SL or TP.
I have included below 2 recent examples on 2 different currency pairs (only a few days ago). Example 1 shows you a full trade that hit TP before the end of the day and Example 2 shows you a trade where TP was not hit but still closed before the end of the day with a profit.
Thank you for reading and wishing you all the best!