Trading Breakout In London Session
New traders often look for price activities that move quickly, and are active. In this case, the London session is the right choice.
As traders who are just entering the market, many are often looking for price activities whose movements are fast and active. London session at 03:00 am is the activity of the most transactions conducted by market participants to start transactions in the market. About 35% of daily transaction volume is in this session.
After the London session on the move, about 5 hours later the American session began to open. The volume of transactions in the American session can be greater or smaller because there is a liquidity factor in each transaction volume, and this is because there are 2 open markets, European sessions and the American session. This article will focus on the London session, before the US session begins.
Fast and Active
The Tokyo market usually moves slowly towards the London session. And as prices start to open from UK-based liquidity providers, traders can usually see an increase in volatility by watching the market move slightly faster than the Asian session. When prices start entering the London session, the average price movements on each major currency pair often increase. Below is an analysis on EURUSD based on time. Note the average movement after the Asian session closes:
Support and resistance may be much more easily penetrated in European session than in Asian session (usually Asian session volatility is lower). In the London session, when market participants were wrong in open positions, SL could close transactions faster. However, when the actors are right, usually the benefits will be maximized and many.
How to Trade Breakouts during London Session
Trading Breakout during the London session was the same as a trade breakout in another session, with the expectation that current market movements have high liquidity and price volatility. Looking at traders in transactions with breakout strategies, many of the market participants will look for Support and Resistant points for their trading transactions. The graph below will illustrate the breakout strategy in more detail.
As you can see, a strong Support Point is found on EURUSD at 1.3000, this allows them to open positions when the price has broken the support line.
Noteworthy in this issue is about risk management.
Traders can close transactions when the support line cannot be broken, assuming the price returns to the previous price. The best way is to cut loss. But if the price is strong to continue the trend after the penetrated support point, this can be used by traders to collect enough profit.
From the picture above, traders don’t even need indicators to show support, just by paying attention to the price action on the market. To facilitate the analysis, traders can combine pivot point, fibonacci, or other indicators into the trading system. The bottom line is that traders can predict comfortably and have confidence in determining Support or Resistance points in the analysis.