London Breakout Strategy: Exact Rules and a Test Since 2012

The London breakout strategy trades the move out of the overnight range when European trading starts. The range is the high and the low a currency pair made during the quiet hours before London opens; the trade is a buy if the price breaks above it in the first hours of the London morning, or a sell if it breaks below, with the stop on the other side of the range. The idea is simple enough to test bar by bar, so this page states one exact version of the rules, shows a week of it on EUR/USD, and gives the results on EUR/USD and GBP/USD over the trading days from January 2012 to October 2026 for which hourly bars are available.

Success rate, in short: with a target of one range width (1R), 53.2% of EUR/USD trades and 54.5% of GBP/USD trades closed with a gain before costs, from 2012 to 2026; the target itself was reached in 39.5% and 41.4% of trades, the rest ending at the stop or at the 16:00 time exit. A win rate alone says little here: the average gain per trade, about 1.8 and 2.7 pips, is smaller than the spread many traders pay.

The London breakout rules tested here

1. The range: the highest high and the lowest low of the hourly bars from midnight to 8:00, London time. London time includes British Summer Time, so the hours in UTC shift by one hour twice a year. A day without all 8 hourly bars of the range, or of the session from 8:00 to 16:00, is skipped.
2. The entry: the first hourly bar from 8:00 to 12:00 London time whose high goes above the range high (buy) or whose low goes below the range low (sell). The entry price is the range edge, or the open of the bar if it opened beyond it. If the first bar that breaks out breaks both sides in the same hour, the day is skipped, since hourly bars cannot say which side broke first.
3. The stop: the other side of the range. The risk per trade is the range width.
4. The target: one range width beyond the entry (1R), tested again with two range widths (2R).
5. The time exit: any trade still open at 16:00 London time is closed at that price.
6. Same bar: if one bar touches both the stop and the target, the stop is counted, the cautious reading. The stop and the target are checked from the breakout bar on, that bar included.

Details for anyone who wants to rerun it: days are London calendar days, Monday to Friday; a pip is 0.0001; the time exit uses the close of the bar that starts at 15:00 London time; results are in pips, before spread and commission.

The chart above draws the range and marks each breakout on the last 120 hourly bars of EUR/USD, from 21:00 UTC on October 18 to the evening of October 23, 2026. All five breakouts that week were to the downside. At 1R, three reached the target (October 19, +23.8 pips; October 22, +28.7; October 23, +18.8) and two were stopped out (October 20, −24.2; October 21, −13.8): +33.3 pips for the week before costs. At 2R the same week ended with two stops and three time exits, of −6.4, +30.0 and +3.8 pips.

Results on EUR/USD and GBP/USD since 2012

From January 3, 2012 to October 23, 2026, on hourly bars, without spread or commission. The hourly data miss 108 weekdays in seven blocks, which are not in the test: December 30, 2019 to January 1, 2020; July 3 to 7, 2023; August 26 to 30, 2024; December 16 to 27, 2024; January 6 to 10, 2025; July 14 to 25, 2025; and May 4 to August 7, 2026. About twenty more weekdays are missing around Christmas and New Year, when the market is closed or nearly so.

On EUR/USD 116 days were skipped because one bar broke both sides, 322 had no breakout before noon and 19 had an incomplete range or session; on GBP/USD, 129, 227 and 18 days. The median range of the traded days was 28.4 pips on EUR/USD and 35.6 on GBP/USD.

Before costs, the rule had a small positive average on both pairs, large enough relative to how much results varied from trade to trade to be unlikely to be luck alone (a t statistic above 3). It was not positive every year: on EUR/USD at 1R the average was negative in 2016, 2018 and 2019, on GBP/USD in 2025 (2024 and 2025 each miss three weeks of data and 2026 more than three months, so those years count fewer trades). In 2026, to October 23, the averages were +4.05 pips on EUR/USD over 118 trades and +2.88 on GBP/USD over 125.

And the edge is small: the break-even cost is the mean itself, about 1.8 pips per round trip on EUR/USD and 2.7 on GBP/USD. With a cost of 1 pip per trade, the 1R mean falls to +0.79 pips on EUR/USD and +1.65 on GBP/USD; with 2 pips, to −0.21 and +0.65.

What did not help

We also split the trades by the width of the range, in thirds, and by day of the week, looking for a filter. Neither gave a clean pattern: the differences between groups were of the same size as the noise between years. Short trades did better than longs on EUR/USD (+2.7 pips against +0.9 on average at 1R), but a difference between two groups of about 1,600 trades each is weak evidence of a lasting effect, and we do not recommend trading one side only on that basis.

How to trade the London breakout

• Fix the hours in London time and let your platform handle the clock changes, or the range will be one hour off for part of the year.
• Size the trade from the range width: the stop distance changes every day, so the position size has to change with it. The position size guide and the lot size in forex guide show how.
• Decide in advance what happens on a two-sided day and on a day with no breakout before noon.
• Keep the time exit. At 2R nearly half of the trades were closed by the clock, not by the stop or the target.

The London breakout is a form of opening range trading applied to the forex day; the general logic of trading a breakout is covered separately. More strategies in trading concepts.