The London Daybreak Strategy is an example of a successful positionless trading system. Many novice traders do not have enough free time to trade with scalping strategies, so they choose day trading strategies.
What is the London Daybreak strategy
It is no secret that large players in the Forex market have the ability to move the currency rate at some distance against the rest of the crowd of small traders. Hence, there is a concept of the Forex market – false breakdowns. The true break-down of the flat zone is the movement of the currency rate at which the break-down occurs and the continuation of the price movement towards the break-down.
But, the major players of the Forex market realized that all small traders began to earn money on the way out of the consolidation zone, so they decided to trick everyone and make a small false breakthrough.
You’ve probably seen the situations where the price consolidation takes place at the beginning of the European trading session, or at the beginning of the London session, and the price breaks through the flat in one direction, and then turns sharply in the opposite direction until the end of the day.
So, the idea of entering the market with pending orders of Buy Limit and Sell Limit in the hope of rebound on the size of the average range in the points of consolidation zone, and became the basis of the updated strategy London explosion.
Let’s take a closer look at the rules and characteristics of the London Explosion strategy.
It is better to choose currency pairs USD/JPY, GBP/USD, EUR/USD to work on the Forex strategy London Breakout Strategy. Since this strategy is a position strategy, the timeframe for the work is either M15 or M30.
A very important point when working on the London open Forex trading strategy is the definition of the Greenwich time zone. According to the terms of the strategy, the trader should measure the time intervals from 8 to 17 hours by GMT.
It’s also important to choose a reliable broker to try out this strategy, so check out London daybreak strategy – FinmaxFX.
Rules of work on the strategy London Explosion
We measure the distance between the maximum and minimum prices in points on the site from 8 to 17 hours by GMT, let’s call it trading range.
After 17 hours of GMT we place two pending orders Buy Limit and Sell Limit at a distance of half of the trading range in points. If the trading range was 50 points, from the beginning of 17 hours by GMT we measure 25 points up for the Buy Limit order and 25 points down for the Sell Limit order.
Stop-loss order on Forex strategy London explosion should be put on the size of half of trading range + 5 points.
Take Profit order on the given strategy is exposed on the size of trading range in points.
If the pending orders are not triggered, the trader should delete all pending orders the next day about 8 hours GMT. Also, when one pending order triggers, it is necessary to delete the second pending order.
It should be remembered that if the trading range is more than 60 points, the trader should not look for the points of entry into the market and wait for the next trading range.
An additional optional rule is to close a profitable or loss-making position at the beginning of the next trading range at 8 a.m. GMT. After all, it happens that the currency pair has not reached the Take Profit in 8 hours, so it is better to close any profit or small loss than to wait for a miracle.
As you can see by the conditions of the London Explosion strategy, the most active time of the London session was not chosen for nothing. After all, the explosion, the impulse, the passage of any currency pair’s price falls on the European and American trading sessions. It is very important to look for the London explosion only when the price leaves the flat, and you cannot enter the market when there is a strong trend. By the way, the rule of limiting the trading range of 60 points will greatly help traders not to jump against the trend.
Advantages of of the London Daybreak Strategy
The London Explosion strategy is a profitable, positional trade for busy people who have the opportunity to trade no more than 3-4 times a day for 10 minutes.
The London Explosion strategy is a kind of counter-trade strategy of work in the Forex market and can fit well into someone’s trading system.
