Secrets to Trading the London Breakout Strategy


The London Breakout Strategy is a popular, as well as, highly rewarding, forex trading strategy. It enables traders to capitalize on the increased volatility during the opening hours of the London session. 

If you wanted to learn all about the London Breakout Strategy, then you are on the right platform. Because we are going to explain this strategy. Additionally, we will also help you learn how to identify high-probability trade setups, manage risk, and take profit from market momentum during this crucial time.

The London Breakout Strategy

The London Breakout Strategy refers to a trading strategy that revolves around capitalizing on price movements of currency pairs during the opening hours of the London market session. It involves identifying a currency pair or pairs that are expected to move up or down significantly during the opening hours of the London market. 

However, it is important to note that this strategy is also not foolproof just like other trading strategies. Therefore, it is important for users of this strategy to understand currency pairs and the London trading session. Additionally, they must also keep themselves updated on any news or economic events that may affect the market. It enables them to take appropriate risk management measures and also take a profit on time.

How to identify high-probability trade setup for the London Breakout Strategy

The following are the key steps you need to follow to identify a high-probability trade setup for the London Breakout Strategy.

  1. Firstly, you need to identify key areas and the London range gives you these areas. The London range refers to the trading range that the Asian market establishes. As you know, the Asian trading session precedes the London trading session. Therefore, the trading range of Asian markets is crucial for trading London Breakout Strategy. 
  2. Secondly, close look for breakouts above or below the key areas identified during the first step. However, it is important not to act immediately after the breakout. Instead, wait for confirmation before entering a trade. 
  3. Thirdly, decide your trade protocols. For example, decide your trade capital, stop-loss, and take profit target.

How to profit from market momentum while managing risk?

While following the London Breakout Strategy, you can place buy orders above the high of the London range. Conversely, place sell orders below the low of the London range. Now, how to profit from market momentum while managing risk?

Profit from market momentum while managing risk by following the two steps below:

  1. Set the stop-loss for both to buy and sell orders at the opposite end of the London range. 
  2. Whereas, set take profit target at twice the distance of your stop-loss. However, this isn’t a hard and fast rule. You can set profit targets according to your own trading strategy.

The wrap-up

The London Breakout Strategy is an effective and fruitful trading strategy. It enables traders to capitalize on price movements of currency pairs during the opening hours of the London market session. However, it is also a fact that no trading strategy guarantees a 100% success rate and this strategy isn’t an exception. Therefore, always conduct proper research, manage risk, and set realistic profit targets to make money and stay in the game for the long term.

Russell Crane

Russell Crane

Russell is an Algorithmic & Technical Analyst Trader @ PatternsWizard.
His passion is to share his knowledge about TA, patterns & more. Why hope for your trading to work when you can precisely know the performance stat of every pattern?

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