This strategy is very simple and can be applied on any currency pair. However, the best currency pairs to apply the London open session 55 EMA breakout strategy is the GBP pairs such as GBP/USD, GBP/JPY, GBP/CHF, and EUR/GBP. The reason behind choosing the Great Britain Pound is because this happens to be its trading session and this particular session has the highest trading volume, volatility and liquidity in the market.

 

Entry rules:

Draw a 55 EMA across your 1 hr time frame chart. If all the candle sticks downloading from Asian session are above the 55 EMA, then the bias for the breakout is an uptrend. As soon as London session opens, measure the highest of the candle stick from Asia session and filter with 5 pips for 4 decimal platform and if you are using a 5 decimal digit platform, 50 is the value you will be using.

 

Place a buy stop order at the price gotten after filter is applied and aim a take profit of 30 pips for 4 decimal, if you are using a 5 decimal digit platform, then 300 is the value you will be using. Normally this strategy will give you a minimum of 30 pips and a maximum of 60 pips profit per entry. Use a stop loss of 30 pips.Repeat the same process if all the candle sticks download below the 55 EMA and place a Sell stop order with the same filter and take profit. To get a better parameter for take profits and stop losses, pivot points such as resistances and supports values can be substituted for this.

 

Exit rules:

If the candle sticks downloading from Asian session crosses across or touches in between the 55 EMA, exit the market for the day. Problem about this strategy is that it will give you minimal entries throughout the month. Maximum of 8 trades a month and minimum of 6 trades a month. So if you are a high frequency trader, this strategy is not for you. However when it gives entry, you can be assured of high probability of winning.

 

IF YOUR ORDER DOESN’T EXECUTE BY THE CLOSE OF THE 12:00 GMT CANDLE.CANCEL YOUR ORDER AND WAIT FOR ANOTHER DAY. THE FIRST THREE HOURS OF THE LONDON OPEN SESSION HAS MOST OF ITS STRONG MOMENTUM AND VOLATILITY BECAUSE THEN ASIA SESSION IS ABOUT ROUNDING UP.

 

A typical example of a good entry is the blue zone and a no-entry trade set-up is shown in the red zone in the diagram below.GBPUSDH1

 

Basic Concept:

The basic concept behind this strategy is simply trading breakouts along with the major trend during the London Open Session. Remember always trade along with the trend and ignore trade signals that are against the major trend. Remember the trend is your friend.

 

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