London Breakout Forex Trading Strategy

The london breakout forex trading strategy as the name say is designed to trade the London forex trading session during the first 3 hours of the London Market opening.

The Importance Of The London Forex Trading Session

The london forex trading session is the biggest forex market mover daily.

Which means that much of the forex daily trading volume happens during the London session. The volume of trades and the amount of money that moves during the first few hours of the London trading session are HUGE!

This can create exciting opportunities and strong trend from the start of the LondonĀ  market opening.

This also means that what ever the trend direction that happens during the first few hours of the London market opening usually determines what the trend is for the day.

Trading Parameters

Currency Pairs: Only trade GBPUSD.

Timeframes: You need only the 1 hour timeframe.

Forex Indicators: You don’t need any forex indicator for this trading system.

London Breakout Forex Trading Strategy Trading Rules

  1. identify the last 3 one hour candlesticks of the Asian forex trading session.
  2. determine the highest high of these 3 candlesticks and also the lowest low.
  3. draw 2 parrallel lines, one of the highest high point and one for the lowest low point of these 3 candlesticks. This forms your breakout “tunnel”.
  4. then place 2 pending orders at the same time: a sell stop pending order 2 pips below the low and a buy stop pending order 2 pips above the high and wait for price to activate one of these pending orders.
  5. When one order is activated, cancel the other pending order.
  6. Place your stop loss 5-10 pips outside of the “tunnel.”
  7. for take profit, use previous swing highs or calculate it based on risk:reward of 1:3.

Advantages of The London Breakout Forex Trading Strategy

  • simple price action trading system and really simple trading rules anyone can understand and follow.
  • only one trade a day…stops your from over-trading.

Disadvantages of The London Breakout Forex Trading Strategy

  • there will be times when the tunnel distance will be quite large most likely due to price spikes on that last few hours of the asian trading session. If the tunnel distance is more that 40 pips, best to not trade.
  • if you are a trader that don’t like only trading one trade a day, this forex trading system is not for you.