Today I will tell you about an intraday European session strategy which can bring you big profits.
About Strategy
This strategy for the European session is an improved version of one of the most popular trading schemes - the London Breakout. All trades are made after the breakouts of a trading range.
The Asian session has quite low volatility. The market often moves within a trading range. At the beginning of the London session, the price usually breaks one of the channel edges and has a subsequent impulse. You can earn on this impulse.
Main Details
Now let's take a look at the main specifications of the strategy:
1. Currency Pairs
This strategy directly depends on market volatility. Without strong fluctuations, impulse formation would be impossible. Therefore, you should choose the currency pairs that are most active during the London session:
- Majors that contain any European currency - EUR/USD, GBP/USD
- European Cross currencies such as GBP/JPY. This pair is particularly volatile.
2. Timeframe
This is an intraday strategy, so trading will be done on lower timeframes. Any chart below daily will do. You can use any timeframe you want. I suggest you to focus on these two:
- Use the H1 chart to determine the edges of the Asian session trading range.
- Use a lower timeframe for the trading itself. The best option would be the M15 chart.
3. Entry Point
The London Breakout strategy requires identifying important price levels. To do this, draw the edges of the trading channel of the Tokyo session. These lines will become your support and resistance levels and will also help determine entry and exit points.
As a rule, the London Breakout strategy implies opening a trade immediately after the breakout. However, the European session is famous for false breakouts. To reduce the potential risks, it is best to wait for direction confirmation before entering a trade. With such an approach, you lose some of the potential profit, but in the long term, your overall result will be higher due to the decreased number of losing trades.
When to open a trade:
- Enter a buy trade when the price breaks the upper edge of the Asian channel and returns to retest the level.
- Open a sell trade after retesting the lower edge of the Asian session range.
4. Exit Points
The base distance to the exit points will be the width of the Asian session channel. Stop Loss is set on the opposite side of the range. Take Profit is also placed at a distance equal to the width of the range.
If you have time to track your trade, then the best option is to let it work out completely. You can gradually move your Take Profit further away from the entry point as the market moves in your direction. Stop Loss can also be trailed following the price. The momentum at the opening of the London session can be quite strong. That gives you an opportunity to make high profits on a single trade.