Implementing London Breakout Strategy In Forex Trading
London Breakout – There are so many strategies that you can apply when trading in the forex market. Each strategy has its own advantages and disadvantages in its application. There are traders who tend to analyze with technical methods and there are also traders who use the fundamental way.
This time we will explain to you all about the strategy of London Breakout which is a very famous technique and done by many forex traders.
Here’s more explanation for you all.
Know the London Breakout Strategy
The London Breakout strategy is one of the most well-known trading techniques among traders. In its development, every trader starts to develop this technique and give different names. The same thing is the concept used remains the same that utilize the movement ahead of the opening of the London market.
The London Breakout strategy is included in the category of mechanical trading system that will capture the rapid movement that took place ahead of the London market opening. When implementing this strategy, some of the things you need to do are basic skills to use Meta, drawing boxes and horizontal lines on charts, and also monitoring the London sessions for several hours.
The thing you need to know next is before the London market is opened there is a session of the Asian market running. Indeed, the highest market activity will be seen at the time of the European session occurs, then by using this strategy you can look for opportunities based on the price range created during the Asian session.
Actually when going to use this strategy, you do not need to use any indicators to be able to run the London Breakout strategy. The important thing here is that you can find out how to create boxes and horizontal lines in Meta.
Thus when going into the London session, you already have a price range as a reference that is formed from the market movement in the Asian session. The price range we mean here is not the entire Asian price range, but the price range in the last 3 hours of the session. In addition, the most suitable currency pairs traded here are GBP / USD, EUR / USD, NZD / USD.
London Breakout Strategy That You Can Apply
All you need to do is create a box in the chart with the last 3 candlesticks that appear before the London session is opened. Candlestick that you can use as a reference is a candlestick from 7 am to 9 am Meta time.
Using the box, you can start drawing 2 pieces of horizontal lines that serve as a support and resistance line. This means you are required to draw 1 horizontal line on the upper side of the box and 1 other line at the bottom of the box.
The next step is to start placing the Stop Order, first you can place the Buy Stop about 5 pips above the resistance and place the Sell Stop about 5 pips below the support.
When one of the Stop orders is executed, the delete Stoprider instantly becomes the opposite. In the sense that Buy Stop is executed, you can cancel Sell Stop and vice versa.
From the above explanation actually apply the technique London Breakout is very simple and you can do easily if you understand the way. Next we will go into the discussion of some of the advantages and also the shortcomings that exist when applying London Breakout.
Excess Existing When You Use London Breakout
Many traders use this strategy because it is very simple and does not require complex technical indicators in its application, including techniques that are easy to apply and understandable even to beginners, and include techniques that are purely using Price Action and can reduce the risk of being late in positions .
Nevertheless there are still some Price Action weaknesses that you need to consider well when going to use them.
The weakness of London Breakout
The first weakness is the potential aberapa trapped by Bull Trap or Bear Trap and on Monday or Friday will occur unusual movements and this will make the existing opportunities in the day is not accurate.
If you include new people who will implement this strategy, then we strongly recommend that you first train and learn this technique first in the Demo Account. If you are already familiar and trained to apply it in Demo Account , then you can start running it in Real Account . Things like this you need to do, because we never know whether the strategy is applied accordingly or not.
Another thing that needs to be underlined here is that even if you use a Demo Account when practicing this technique, then treat it like you use a Real Account .The customs you do in your Demo account will make it easier for you to apply these techniques later.
For those of you who are newbies and want to apply forex strategies that are easy to do and potentially profitable, then London Breakout could be an option you can use. Apply the simple techniques we’ve presented above gradually and slowly.
Hopefully with the above explanation of knowledge and trading techniques that you have increasing from before. Please do not hesitate to ask us if any of the above explanations are poorly understood.