Forex trading strategy #7 (Simple breakout System)
Submitted by Edward Revy on June 18, 2007 - 07:12.
The idea behind this simple Forex trading system is to capture an early move of the price when it starts to establish its new direction/trend for the day.
As we know the Frankfurt market opens at 2:00 am EST (which is 7:00 am GMT), then an hour later the other giant - London market opens at 3:00 am EST (which is 8:00 am GMT). The European session is the first major session for each coming day.
So, what do we do?
We start with 1 hour time frame, preferred pair - GBP/USD and no indicators.
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Dear Edward,
Thank you very much. is this strategy same that is Big ben Strategy ?
Thank you
Alex
Hi kok,
I'm fine with any questions :)
I can't, however, understand the second question of yours...
When I say 6-7am GMT, that means you look at 5 min charts and highlight the time which falls into the range between 6:00am and 7:00am. There will be 12 candles each representing a 5 min of trading. Within those 12 candles you should find a candle with the highest price point - this is your HH (Highest High) and a candle with the lowest price point - this is your LL (Lowest Low).
Happy learning,
Edward
sorry edward.. i mean highest high and lowest low
sorry about that
kok- from malaysia
hi Edward,
thank you very much for sharing this good trading strategy.i am a newbie in FX trading, i may ask silly questions.. hope u don't mind
a) you were saying 6-7am GMT what does it mean? which candle should we take to get the HH and HL
b) would appreciate it very much if you could provide which candle to take to get the HH and HL of the following pairs i) GU, II) EU, III) UJ
thank you very much
kok-from Malaysia
Hi Richie,
I haven't tested it on 3min time frame.
I think it can be done, not a bad idea.
Regards,
Edward
Hi Edward, thanks for your insight. I was wondering if you have tested going to a 3 minute time frame to get a better entry.
Richie
Without a doubt :)
Thank you Dean, for this informative highlight!
Following the trend is the healthiest option.
Best regards,
Edward
Hi Ed -
Just an interesting observation regarding the false signals. It's really simple. Most of the false signals / whip saws this month (Aug 08) have been buy signals (long) and its pretty obvious that we are in a neg trend (GBP/$ and Euro/$). So if the signal is opposite to the trend - we can expect a false breakout and a retracement. Its not to say that all the breakouts against the trend cost us pips! Its just interesting to note that most of the false signals occurred when getting a buy signal in the neg trend. If you had to set a 20 pip SL for the buy signals for Aug 08 and use the other side of the tunnel as your SL for the sell signals - you'd have had very few losses with you shorts.
So maybe its a good idea to use the trend to establish the size SL you should be using.
Good luck
Thanks
Dean SA
Hi Dean,
Consider trading only the first breakout. If missed out, leave it and move on. Timing plays important role for this Forex trading strategy and the first breakout after early morning consolidation is traders' best opportunity to profit.
Later, re-entry into a range (either as a retracement or a closed candle) is no longer watched..
Best regards,
Edward
Hi Ed -
What do you consider a re - entry into the range. It sometimes happens that I miss the 1st breakout of the day and then have to wait for the next signal later in the day. I'm not sure what to look for with the 2nd or 3rd signal. Do I need to wait for a closed 5 minute candle inside the range again or can i just wait for the price to retrace back into the range then wait for the closed 5 min candle outside again?
Thanks for a fantastic site and all the help!
Regards
Dean - SA
The system from PatrickB can be found at:
Patrick's trading system
Happy Forex trading!
Edward
Hi,
when DST time starts London market also operates in DST.
when DST time ends London market operates in GMT.
An application at Forex market hours may be helpful in finding the right timing for all Forex markets.
Regards,
Edward
Hi, can anybody tell me the time which London market open if the DST (Daylight saving) is started in GMT and if not?
DST starting around march 30 every year (London+1hour)
-Now the London market opens at ?? GMT
DST ending around October 26 every year
-Now the London market opens at ?? GMT
Best Regards.
Hi PatrickB,
Thank you for a good review and tips.
In order to add an indicator, please send it to
and we will gladly post it here. Thank you.
Happy trading!
Edward
Hi Fraser,
I've read about Big Ben strategy before, however never done full scale testing.
Regards,
Edward
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