London Free Breakfast Forex

Trading Strategy

Most traders, when they start off trading, they try to find
the simplest strategy that would give them huge profits
with minimal risk, a “free lunch” so to speak.

I’m sorry to break it to you but there is none. Trading

is simple to learn, but very difficult to master, and in
this game only the masters earn.

Huge profits with minimal risk? Nah…

There is no such thing. In trading, risk is always involved

and usually, the higher the reward aimed for, the higher
the risk.

There is no free lunch.

However, there are simple strategies that you could do
everyday that could possibly put you in profit.

The caveat though is that it is still a probabilities game.

Risk is still involved.

It is always good to be familiar with the characteristics of

the currency pairs you are trading, as well as the markets
that affect forex.

To better understand this strategy, we will explore

these two factors affecting our forex strategy.

First, the markets. There are three main markets in the

forex world.

Asian market lead by Tokyo, the European market lead by

London, and the US market led by New York.

These three have different characteristics. The

Asian market is the timid type.

Its sessions are rather quiet, and volatility is rather

slow during the Asian hours.

London and the rest of Europe on the other hand is quite

on the aggressive side.

It is marked by a spike in volatility and large volumes of

transaction.

The US market is rather volatile but a little more behaved

as compared to Europe.
Although I couldn’t vouch on that now that a little word
from US politicians could make the US market as wild as
gang busters.

Going back to our topic, the London open is characterized

by a spike in volatility.

This is because coming from the Asian market, which is

very quiet, the sudden increase in volume and
transactions is rather glaring during the London open.

This is a very big opportunity for us as traders as volatility

is usually our friend.

Now, onto the currency we would like to trade. For

starters, we would like to trade the cable – GBP/USD.

The cable is one of the most volatile currencies among

the major pairs.

This is because the pair consists of the currencies used

by two of the largest forex markets.

This is why many traders say the Cable can be very rowdy.

So, now that we have an idea of how the London open

and the Cable behaves, let’s move on to our strategy.

The Setup: London Free Breakfast Strategy

This strategy again is very simple. It is very mechanical

and can be done by beginner traders.

I would consider this as a beginner strategy.

Another thing about this strategy is that it works usually
in the first couple of hours after the London market opens.

This means that if all goes well, you would be in profit

before lunch, if you’re living in London anyway.

So, on to our free breakfast.

First, we will have to box the Asian session, from it’s open
to the close, as this is usually a ranging type of market.

This box is what we will be looking for a breakout from.

We will mark the high and low of the session, which will
be our support and resistance.

Then, we will be looking for a breakout.

The first breakout from any of the two will be our

trend direction.

It should also be a momentum breakout, which closes

beyond the box.

If it is just a poke, then disregard it as it is just a testing

of the support or resistance.

As soon as the candle closes outside of the box, we take

the trade going that direction.

Timeframe: 15-minute chart

Buy Entry:

 Box the Asian session from the open to the

close marking the high and low of the session
  On the London open, wait for a candle to close
beyond the high of the Asian session
 Enter a buy market order on the close of the
breakout candle

Stop Loss: Set the stop loss at the low of the breakout
candle

Take Profit: Set the take profit target at 30-50 pips

from the entry price

Sell Entry:

 Box the Asian session from the open to the close

marking the high and low of the session
 On the London open, wait for a candle to close
beyond the low of the Asian session
 Enter a sell market order on the close of the
breakout candle
Stop Loss: Set the stop loss at the high of the
breakout candle

Take Profit: Set the take profit target at 30-50 pips

from the entry price

Conclusion

This strategy is a simple yet logical strategy.

It is suitable for beginners who are still trying to learn to

read price action, or still trying to find the indicator that
they want.

For the meantime that they are still learning, they could
use this simple strategy to earn while learning.

Although this strategy is quite good, it does have failed

breakouts.
There will be time when after the breakout, price would
dive back in the box and reverse to the other side.

There are also times when the momentum candle is just

too long, there is just little room for it to continue, then it
reverses on your trade.

There would also be times when the following few candles

after the breakout, price would reverse for a while and
even poke or close back in the box for a while before
going our direction.

You would notice that on our sample trades.

Remember, this is the Cable and it is very volatile.

But this volatility could also make you money for a while.

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