forex trading strategy "London explosion"
The London Explosion strategy is built on trade on a possible price impulse after the Asian session. The trading system itself has undergone significant changes over time and has produced many different options, but its essence and basis have remained unchanged.
In this article we will discuss two modes of trade under this strategy at the European trading session.
Classic London Bang S forex trading strategy
To get started, you need to prepare a schedule of the trading tool you have chosen for your work. The first thing to do is to mark the boundaries of the trading sessions in the trading terminal. This can be done as manually, for example, vertical lines, or use the start and end indicators of trading sessions, which are freely available on the Internet. Next, a moving average with period 360 (EMA indicator 360) should be plotted. By it, we will determine the global trend, and therefore the direction of trade.
For forex trading strategy "The London explosion" major currency pairs, such as EUR/USD, GBP/USD, USD/CAD are ideal. The recommended time intervals for trading are М15 or М30. Although, note that the selection of the working time interval is not fundamental.
Prior to trading under the forex trading strategy
, it is necessary to measure the size of the price corridor that formed during the Asian trading session. These measurements should be plotted with Japanese candles based on their shadows. If the market rundown at the Asian session amounted, on the instruments outlined above, to 60 or more points, then, according to the London Explosion strategy, we cannot trade on that day. This trading strategy assumes that the currency pair, in the case described, has already passed its range during the Asian session. Consequently, the momentum possible at the opening of London will not have enough strength to achieve the cost of teak profit.
Now it is necessary to decide on what trend is now in the market. To do this, we use our moving average EMA 360.
When the price at the close of the Asian session is below the moving average, we enter the market in a short position. If the price chart at this point is higher than the mooving - we buy.
Next, after we have decided on the direction of entry into the market, we establish deferred warrants as follows. According to the London Explosion strategy, the sale warrant is set at 5 points below the lower price extremum that was formed in the Asian session. This is for the case where the price is at a moving average. And 5 points above the maximum - for purchases, respectively.
We will decide on the issuance of warrants to fix profit and limit loss. According to the London Explosion strategy, stop loss should be set for an extreme Asian session opposite to a delayed warrant. For purchases we set the stop loss 5 points below the minimum of the Asian trading session, and for sales - 5 points above its maximum.
For the production of the teak profit, the London Explosion strategy allows two options. The first is based on calculation and mathematical expectation. He 's at least 1.5 times the stop loss. However, practice shows that such an approach is not always justified. The second option is to install the teak at strong levels of resistance and support, which are formed on senior timeframes.
London Explosion: A New Look forex trading strategy
In this variation of the trading system, its authors moved away from analysing the schedule of the Asian session and its use in trade. They suggest analyzing the time interval from 9 to 18 hours.
In this version of the strategy, market entries differ significantly. Deferred warrants are set at a distance equal to half the size of the price range that formed the market during the 9.00 from 18.00 a.m. to 3 p.m. Two orders are established - to open long and short positions on both sides of the price range limits. Accordingly, the warrant data, according to the London Explosion strategy, a new look is established after 18 hours.
Support of deals in this version of the London Explosion strategy is as follows. When one of the pending orders is triggered, the other must be immediately removed from the trading terminal. If none of the 9.00 warrants worked before the end of the next trading day, they should be cancelled at that time. Teek profit is equal to the value, which is the full width of the price range formed during the time from 9.00 to 18.00. If the deal opened and did not close by the onset of 9 a.m. on the teak or on the foot, it should be closed with hands on the market. This is necessary regardless of the intermediate result that your open tool shows by this time.
The security warrant is set as follows: it is equal to half the width of the price range in which the instrument was traded from 9 to 18 o 'clock. You can add plus 5 points to this value for more confidence.
The reader may have the impression that Forex 's London Bang strategy does not work its inputs well, as in statistical analysis of graphs, we do not rarely see a situation where the price makes a false sample and turns in reverse. But, in fact, that 's not the case. In order to avoid entry into the transaction in similar situations, the optimal parameters for trade, which are described in this article above, have been experimentally selected. And they, in turn, in practice give the largest percentage of profitable deals.
One of the main differences in the two versions presented is as follows. In the first case, the entry into the market when delayed warrants are triggered will be much less than in the second. In the second case, warrants will be opened almost every day.
As practice and statistics show, each of the options of the forex trading strategy
"London Explosion," with long work and compliance with the rules of the system, gives its positive results.