The London breakout trading strategy is used to trade the  London Forex session during the first few hrs (1-3 hrs) when the Forex market opens in London. The London trading session is the biggest Forex market mover as much of the trading volume for currency trading is during this session.

Breakout of last 3 hours of Asian session determines the trend direction of GBPUSD in the London session thus it trend may continue up to US trading session.

“Huge” amount of money and volume of trades are traded in the first few hours of London Forex market and hence creates some exciting trading opportunities. It’s all about catching the trendy move to the upside or downside during the early hours of the London market opening and trading accordingly.

Timeframes :  1 Hour

Currency Pairs : You can use this strategy for Only GBPUSD.

Indicators :  Forex trading session mt4 indicator & Horizontal lines.

This trading strategy works as :

• Identify the 3 previous candlesticks in the Asian Forex trading session.
• To form your breakout levels find the high and low of these candlestick .
• Draw a horizontal line on the highest point of these three candlesticks, If price breaks above this line, it’s a buy signal.
• Draw another horizontal line on the lowest price point between these 3 candlesticks, If price breaks below this line, this is your sell signal.

Place your breakout orders :

Place two opposite pending orders, a buy stop order and a sell stop order at the same time.

Long Entry :

You need to place buy stop order anywhere from 1-2 pips above the top horizontal line i.e  highest price point of the 3 last Asian session trading candlesticks and its stop loss would be the at least 5 pips below the lower horizontal line.

Short Entry :

You need to place sell stop order 1-2 pips below the low of the lower horizontal line and your stop loss at least 5 pips above the top horizontal line.

Once an order gets activated, cancel the other pending order.

Trade Management :

• Trail stop to lock in your profits as trade moves in your favor.
• The first trailing stop technique is by trailing it by “A” pips when price move by “A” pips or some similar variation like, trailing it by “A” pips when price moves by “2A” pips. For example, if price moves by 30 pips, the move trailing stop by 30 pips. Or if price moves by 60 pips then move trailing stop by 30 pips.
• However, the best trailing stop technique is moving the stop loss behind swing high (or low) point/peaks as price moves in favor the possibility of your trailing stop being hit prematurely is drastically reduced.

Close Trade :

At the end of the London trading session, you must close your trade.  Do not hold it overnight like swing trading strategies.  Just close it even if it mean you have a 10 pips profit or a 10 pips loss. Never hang on your trade hoping for a few more pips in the US trading session.

Pros :

• Simple and easy Strategy.
• Simple time breakout strategy does not require any indicators.

Cons :

• Forex market may not move as expected and this can lead to trading losses.
• It’s better to avoid trading on Monday and Friday as market usually is slow on Mondays and spikey on Friday’s.