The variation I use is based on the 7am to 8am candle on the EUR/USD. Anything below 10 pips is a no trade, anything above 30 pips is no trade. 10-30 pips is condition 1. Condition 2 is there should be no big news coming out during the day. This is a strategy based solely on an average day. Condition 3 is there shouldn't be a holiday for either London or New York on that day. 4th of July for example is a no trade day. Or at least not trading this strategy day. Condition 4 is that once the trade is entered and closed for whatever reason, hitting stops in particular, the strategy isnt used until the next 7-8am candle the following day. The market gets entered once a day and that is it. This 7am to 8am candle becomes the no trade zone for the day and no trades are to be conducted in this area at all. Using the trend of a 50 and 200 moving average, gives me the direction I should go in. if the 200 is below the 50 then I set a market order 1 pip above the high of the 7-8am candle. I don't take sell trades if the market is clearly in an uptrend and the opposite is true, the 200 above the 50, I set a market order 1 pip+ spread below the 7-8am range. Stops 1 pip + spread above or below the range of the 7-8am candle. Target wise, I use the 7-8am candle and draw essentially pivot points based off of that. say the 7-8am candle is 25 pips high, I have TP1 at 25 pips from the market order, TP2 at 50 pips and TP3 at 75 pips for almost 1:1, 2:1 and 3:1 targets, obviously taking into account the spreads. You can set out TP4 and TP5 in the same manner if the market is particularly bullish/ bearish for whatever reason that day There are multiple ways to set stops. The first is to follow the market, as it hits TP1, stop loss moves to breakeven, as it hits TP2 stop loss moves to TP1, as price hits TP3, stop loss to TP2. You can follow this up until the market retraces and you're stopped out. There are some days that it is possible to hit 5 or even 6 RR! This I find annoying though, because price tends to retrace and retest the first TP zone or even retesting the breakout of the 7-8am candle causing to exit the trade and the market carries on moving downwards, usually surpassing TP2 and TP3. The other way is to take off half the trade at TP1, leaving the stop loss where it is and let the rest run its course. Idea being that because TP1 should be 1:1, you've left room for the stops to not be hit and even if stopped, you're still breakeven for the day. Then you exit fully at TP3, or after 5pm GMT, whichever comes first.
Hey. Great description. Do you still trade it like that? Have you tested the strategy over a larger period of time for the pair you trading it (EUR/USD)? What are the results like? I’ve now tested a tons of different variations of the London breakout approach but non of them achieved consistent profitable results on a monthly or quarterly base.
@@heeweegoo usually trade the EURGBP as both market participants are involved at that time at the beginning of both the frankfurt and london open. Have had decent results with it. But i trade differing strategies now that offer much larger RR
Hello, Very good job. Thanks. Please test strategy on: 8:00 London , Max and Min candle by 8:00 London. BUY = Max + 5 pips, SL Minimum Candle 8:00 London; SELL= MIN+5 pips, SL Maximum candle 8:00 London; M30; R:R=1:2; End of transaction 11:30. Please check this and other circumstances to test.
I've not heard that definition of the London Breakout before. I've only ever heard of the entry point being when a candle closes outside of the Asian trading range. Doing it the way you describe here you are starting your trade while it's well within the Asian trading range while it is still going up and down and only getting to Profit IF it breaks out and keeps going. It seems to me you would get a lot of stopped orders doing it this way since it likes to range up and down through the Asian range before finally breaking out. I just back tested the last seven days and it only worked on one of them. The rest were stopped out. Quite often the price at the open is in the same half it's going to eventually break out in as well (ie if it's above the half way line it breaks long and if it's below the halfway line it breaks short. I think the convenience of your definition is that it's easy to place an Order ahead of time because you know exactly where the halfway point is at open. Whereas if you do it on "candle closes outside of Asian range" you are going to have to wait and watch the charts. I think I will test a strategy of placing orders one or two ATR outside the Asian range and see how that goes.
Suggestion: make a graph that shows the efficiency of the strategy over time in relation to just buying and holding. One could argue that seeing those profits over such an extended period of time is not because of the strategy, but because of general macro trends or similar arguments. So, showing an efficiency ratio in a graph would be pretty interesting in my opinion.
You could try adding a daily bias to the strategy. Buys only on Tuesday, Wednesday. Sells only Thu, Fri, Mon. The hold period could also be 2 days or a certain number of hourly bars. Have a great day there!
@@TheTransparentTrader Some trade this the opposite way fade at the breakout levels with success on a few pairs. Limit sell the High level, and limit Buy the low level of the first 4 hour bar. Stoploss=250. Days: Monday, Wednesday, Thursday.
Been looking for that! Thanks. I agree with Franco's comment below. In addition, the equitiy curve seems to flatten, which would've been nice to discuss.
The reality is that the London breakout strategy doesn't work nearly as consistently as it may have before retail traders got their hands on trading software decades ago. The markets are so hyper algo'd now that nobody can consistently use this strategy. I just see randomness when I back test.
I’m not sure if the red bar at the bottom of the thumbnail helps to get views or not, but personally it’s confusing as it makes it seem like I’ve already watched the video when I haven’t
Great video, wouldn't the result be different is using a broker with only commission and no spreads? I do not have to worry about spreads and my commission is not $20, more like $3.5 per lot payable per side. Wouldn't that make it more profitable?
Yes I trade this strategy on EU GU and even with commissions it should still bring over 50% gain yearly idk why he thinks the trading cost is so high i found it best to use the 30m candle and target 1.5 RR each trade very good strategy
👍Thanks there's a lot for us retail newbies to learn from your approach.👍 Q: Time -- so UK and NY both change their clocks/daylight saving -- but Tokyo doesn't. So in summer do we start at 9 am or 7 am and then what about proximity to Frankfurt kicking in????
Hi. Entering in the midle of tge asian range , not always the best idea . There is the reversal pattern , the continuation pattern , and some other 2 more ways to enter in london opening . You shoud add some linear regresion trend , watch for asian opening in comparison with london open and variations . There is a range asian sesion and a tranding asian session . You could not trade the same both
Having an experience to these stuff, i can say one more time to the readers of this comment, that Jarrod approach to trading is methodical and can give you a statistical edge, the holy grail of trading. I was inspired to create my own channel and even we deal with two different platforms, i still believe i have room to grow, by watching his videos.
The variation I use is based on the 7am to 8am candle on the EUR/USD. Anything below 10 pips is a no trade, anything above 30 pips is no trade. 10-30 pips is condition 1. Condition 2 is there should be no big news coming out during the day. This is a strategy based solely on an average day. Condition 3 is there shouldn't be a holiday for either London or New York on that day. 4th of July for example is a no trade day. Or at least not trading this strategy day. Condition 4 is that once the trade is entered and closed for whatever reason, hitting stops in particular, the strategy isnt used until the next 7-8am candle the following day. The market gets entered once a day and that is it.
This 7am to 8am candle becomes the no trade zone for the day and no trades are to be conducted in this area at all. Using the trend of a 50 and 200 moving average, gives me the direction I should go in. if the 200 is below the 50 then I set a market order 1 pip above the high of the 7-8am candle. I don't take sell trades if the market is clearly in an uptrend and the opposite is true, the 200 above the 50, I set a market order 1 pip+ spread below the 7-8am range. Stops 1 pip + spread above or below the range of the 7-8am candle.
Target wise, I use the 7-8am candle and draw essentially pivot points based off of that. say the 7-8am candle is 25 pips high, I have TP1 at 25 pips from the market order, TP2 at 50 pips and TP3 at 75 pips for almost 1:1, 2:1 and 3:1 targets, obviously taking into account the spreads. You can set out TP4 and TP5 in the same manner if the market is particularly bullish/ bearish for whatever reason that day
There are multiple ways to set stops. The first is to follow the market, as it hits TP1, stop loss moves to breakeven, as it hits TP2 stop loss moves to TP1, as price hits TP3, stop loss to TP2. You can follow this up until the market retraces and you're stopped out. There are some days that it is possible to hit 5 or even 6 RR! This I find annoying though, because price tends to retrace and retest the first TP zone or even retesting the breakout of the 7-8am candle causing to exit the trade and the market carries on moving downwards, usually surpassing TP2 and TP3.
The other way is to take off half the trade at TP1, leaving the stop loss where it is and let the rest run its course. Idea being that because TP1 should be 1:1, you've left room for the stops to not be hit and even if stopped, you're still breakeven for the day. Then you exit fully at TP3, or after 5pm GMT, whichever comes first.
Hey. Great description. Do you still trade it like that? Have you tested the strategy over a larger period of time for the pair you trading it (EUR/USD)? What are the results like? I’ve now tested a tons of different variations of the London breakout approach but non of them achieved consistent profitable results on a monthly or quarterly base.
@@heeweegoo usually trade the EURGBP as both market participants are involved at that time at the beginning of both the frankfurt and london open. Have had decent results with it. But i trade differing strategies now that offer much larger RR
@@BMWE-hm7uz wow thanks for sharing that! when you say 7-8am, do you mean london time? Or gmt?
@an mayo London and GMT is the same. If it makes it easier, right now it is 1710 London time, work out that from the timezone your in now
@@BMWE-hm7uz in the uk they have summer & winter time, so right now aren't they gmt+1 ?
Why do you risk 1.00 lot per trade, wouldn’t the results be better if you calculated your lot size based on 1% risk ?
Hello, Very good job. Thanks. Please test strategy on: 8:00 London , Max and Min candle by 8:00 London. BUY = Max + 5 pips, SL Minimum Candle 8:00 London; SELL= MIN+5 pips, SL Maximum candle 8:00 London; M30; R:R=1:2; End of transaction 11:30. Please check this and other circumstances to test.
Trading cost kills 99% of trading strategies.
I've not heard that definition of the London Breakout before. I've only ever heard of the entry point being when a candle closes outside of the Asian trading range. Doing it the way you describe here you are starting your trade while it's well within the Asian trading range while it is still going up and down and only getting to Profit IF it breaks out and keeps going. It seems to me you would get a lot of stopped orders doing it this way since it likes to range up and down through the Asian range before finally breaking out. I just back tested the last seven days and it only worked on one of them. The rest were stopped out. Quite often the price at the open is in the same half it's going to eventually break out in as well (ie if it's above the half way line it breaks long and if it's below the halfway line it breaks short. I think the convenience of your definition is that it's easy to place an Order ahead of time because you know exactly where the halfway point is at open. Whereas if you do it on "candle closes outside of Asian range" you are going to have to wait and watch the charts. I think I will test a strategy of placing orders one or two ATR outside the Asian range and see how that goes.
Yeah I think he’s missing the “breakout” portion of the London Breakout strategy lol😅
Suggestion: make a graph that shows the efficiency of the strategy over time in relation to just buying and holding. One could argue that seeing those profits over such an extended period of time is not because of the strategy, but because of general macro trends or similar arguments. So, showing an efficiency ratio in a graph would be pretty interesting in my opinion.
That's interesting and a good idea!
You could try adding a daily bias to the strategy.
Buys only on Tuesday, Wednesday. Sells only Thu, Fri, Mon.
The hold period could also be 2 days or a certain number of hourly bars.
Have a great day there!
A good idea. The filters I tried did not include trading day of the week yet.
@@TheTransparentTrader Some trade this the opposite way fade at the breakout levels with success on a few pairs.
Limit sell the High level, and limit Buy the low level of the first 4 hour bar.
Stoploss=250. Days: Monday, Wednesday, Thursday.
Been looking for that! Thanks. I agree with Franco's comment below. In addition, the equitiy curve seems to flatten, which would've been nice to discuss.
The reality is that the London breakout strategy doesn't work nearly as consistently as it may have before retail traders got their hands on trading software decades ago. The markets are so hyper algo'd now that nobody can consistently use this strategy. I just see randomness when I back test.
I’m not sure if the red bar at the bottom of the thumbnail helps to get views or not, but personally it’s confusing as it makes it seem like I’ve already watched the video when I haven’t
I agree with that... Got me confused too
Your simply amazing thank you kind sir for all your hard work and giving it to us for free. May you have thousands of successful trades
what if you would risk a fixed % like 0,5%($500) instead of using a fixed lot size of 1 ?
is there any reason with using GBPUSD ? How about EURUSD ?..or USDJPY ?
Thank you
Superb video and analysis. Thank you!
Great video, wouldn't the result be different is using a broker with only commission and no spreads? I do not have to worry about spreads and my commission is not $20, more like $3.5 per lot payable per side. Wouldn't that make it more profitable?
Yes I trade this strategy on EU GU and even with commissions it should still bring over 50% gain yearly idk why he thinks the trading cost is so high i found it best to use the 30m candle and target 1.5 RR each trade very good strategy
Thank you very much for doing the hard work for me!
I will look for other your strategies and probably will buy some.
👍Thanks there's a lot for us retail newbies to learn from your approach.👍 Q: Time -- so UK and NY both change their clocks/daylight saving -- but Tokyo doesn't. So in summer do we start at 9 am or 7 am and then what about proximity to Frankfurt kicking in????
Most FX exchanges use NY time zone. So all of my testing is done fixing the time in NY time. It doesn't change at any time during the year.
Very informative video and important tests thank you for the awesome work
Hi. Entering in the midle of tge asian range , not always the best idea .
There is the reversal pattern , the continuation pattern , and some other 2 more ways to enter in london opening .
You shoud add some linear regresion trend , watch for asian opening in comparison with london open and variations .
There is a range asian sesion and a tranding asian session . You could not trade the same both
Great topic, thanks 👍
What platform can I use to auto test my strategy based on rules i can enter
Slippage can be also positive so not such a problem. Spreads, commisions and overnight fees are more of a problem.
I just wanna learn how to backtest like this
Having an experience to these stuff, i can say one more time to the readers of this comment, that Jarrod approach to trading is methodical and can give you a statistical edge, the holy grail of trading. I was inspired to create my own channel and even we deal with two different platforms, i still believe i have room to grow, by watching his videos.
Yeah, not very good.
Japanese candlesticks😃😃 ....Yaay!
What a useless video. Conclusion not to trade.