Simple But Profitable London Breakout Trading Strategy - GoTrade4me


A London breakout trading strategy is a method of trading that aims to take advantage of the increased volatility and trading volume that occurs during the London session, which is the time period when the London stock exchange is open for business. Here is a simple, but potentially profitable, London breakout trading strategy:

  1. Identify a currency pair that tends to have a lot of movement during the London session, such as the GBP/USD or EUR/USD.
  2. Use a 15-minute or 30-minute chart to monitor the price action of the currency pair during the London session.
  3. Set a buy stop order above the high of the most recent consolidation period, and a sell stop order below the low of the most recent consolidation period. The idea is to capture a breakout in either direction.
  4. Set a profit target for the trade using a multiple of the average true range (ATR) of the currency pair. For example, you might set a target of 2 times the ATR.
  5. Set a stop loss for the trade using a multiple of the ATR. For example, you might set a stop loss at 1 times the ATR.
  6. If either the buy stop or sell stop is triggered, enter the trade and manage it according to your predetermined profit target and stop loss.

This strategy can be profitable if the currency pair exhibits strong trends during the London session and if you are able to accurately identify key levels of support and resistance. However, it is important to note that all trading carries some level of risk, and it is important to carefully manage your risk and use appropriate risk management techniques.

How to identify a strong trend during London Session?

There are several ways to identify a strong trend during the London session:

  1. Use trend-following indicators: There are a number of technical indicators that are designed to help identify trends, such as the moving average convergence divergence (MACD), the average directional index (ADX), and the relative strength index (RSI). These indicators can be useful in identifying the strength of a trend and whether it is likely to continue.
  2. Look for strong moves on the chart: If the price of a currency pair is making strong moves in a particular direction during the London session, it could be an indication of a trend. These moves may be accompanied by large price candles on the chart and high trading volume.
  3. Use trend lines: Trend lines are lines drawn on a chart that connect two or more price highs or lows. They can help to identify the direction and strength of a trend. If the trend line is steep and the price is consistently making higher highs or lower lows, it could be an indication of a strong trend.
  4. Monitor economic news: Keep an eye on economic news and events that could impact the currency pair you are trading. If there is significant news or events during the London session, it could cause the price of the currency pair to trend in a particular direction.

It is important to note that no single method is foolproof and it is always a good idea to use a combination of techniques to help identify trends. Additionally, it is important to remember that trends can change, so it is important to continuously monitor the market and be prepared to adjust your strategy as needed.

How to use MACD to identify strong trend for GBPUSD during London Session?

The moving average convergence divergence (MACD) is a popular technical indicator that is commonly used to identify trends and trend reversals. Here is how you can use the MACD to identify a strong trend for GBP/USD during the London session:

  1. Add the MACD indicator to your GBP/USD chart: To add the MACD to your chart, you will need to access the indicator menu in your charting software and select the MACD. You will need to enter the parameters for the indicator, such as the number of periods for the moving averages and the MACD line.
  2. Look for a strong MACD signal: The MACD is made up of two lines, the MACD line and the signal line. When the MACD line crosses above the signal line, it is a bullish signal, indicating that the trend is likely to continue to the upside. When the MACD line crosses below the signal line, it is a bearish signal, indicating that the trend is likely to continue to the downside.
  3. Confirm the trend with other indicators: It is always a good idea to confirm a trend with other technical indicators or with price action on the chart. For example, you might look for a trend line that confirms the direction of the trend, or you might use the relative strength index (RSI) to confirm the strength of the trend.

It is important to note that the MACD is just one tool among many that you can use to help identify trends. It is always a good idea to use a combination of techniques and to carefully consider all available information before making a trading decision.

How to use RSI to identify strong trend for GBPUSD during London Session?

The relative strength index (RSI) is a popular technical indicator that is commonly used to identify overbought and oversold conditions in a market, as well as to identify trends and trend reversals. Here is how you can use the RSI to identify a strong trend for GBP/USD during the London session:

  1. Add the RSI indicator to your GBP/USD chart: To add the RSI to your chart, you will need to access the indicator menu in your charting software and select the RSI. You will need to enter the parameters for the indicator, such as the number of periods for the calculation.
  2. Look for an RSI reading above 70: If the RSI is above 70, it is considered overbought and may be an indication that the trend is starting to lose momentum. If the RSI is below 30, it is considered oversold and may be an indication that the trend is starting to gain momentum.
  3. Confirm the trend with other indicators: It is always a good idea to confirm a trend with other technical indicators or with price action on the chart. For example, you might look for a trend line that confirms the direction of the trend, or you might use the moving average convergence divergence (MACD) to confirm the strength of the trend.

It is important to note that the RSI is just one tool among many that you can use to help identify trends. It is always a good idea to use a combination of techniques and to carefully consider all available information before making a trading decision.

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