London Field Retest Foreign exchange Buying and selling Technique

The London Box Retest Strategy is a strategy that takes advantage of and takes advantage of the directional cues that occur during the London trading session. Knowing and understanding intraday cycles in Forex is a very powerful tool. It gives traders an idea of ​​the reasons for certain sudden volume spikes that often lead to changes in direction.

The forex market consists of three major market sessions, Tokyo, London and New York. While there are other markets that open at different times during the day, such as Australia and Frankfurt, these three are the largest. These three markets have different characteristics that are unique to them due to the location and size of the market.

Tokyo is the first of the three markets to open during a trading week. The lead time in London is approximately 8 hours. It is characterized by a relatively small volume with lower volatility. In London, the second store that opens is just the opposite. It is the largest market and with this size comes large trading volumes and more volatility. The New York session is something in the middle. It is the second largest market. As such, it also has a relatively high trading volume and volatility.

Given the characteristics of the Tokyo and London sessions that are opposite opposites, there is an opportunity that could be exploited based on these market cycles. The lower volume, lower volatility session in Tokyo often has a fairly tight trading range. In addition, the lead time before the opening of the London session is around eight hours. This allows the Tokyo session to create a well-defined area. Then the London market opens. During this time there is an overlap between Tokyo and London which is around an hour depending on daylight saving time. With the opening of the London market, there is a sudden influx of volume and volatility. This is due to the pent-up business that the London and European markets face when the market opens. As volatility and volume explode, the market tends to break out of the area created during the Tokyo session. While it's not a rule of thumb, these outbursts from the Tokyo series often became the topic of the day for the London session.

Forex Breakout Box

Given this knowledge of the characteristics of different sessions, many traders have programmed an indicator that clearly indicates the area that was created during the Tokyo session and the time when the different trading sessions begin and end. The forex breakout box is one of those indicators.

The forex breakout box conveniently marks the Tokyo session area with a purple rectangle. Then it also marks the start of the London session with an orange-blue line.

Trading strategy concept

This strategy uses the Forex Breakout Box custom indicator to take advantage of breakouts occurring during the London session.

First we would have to wait for the price to break out of the box. The price should close above the blue line. Then we wait for the price to go back to the edge of the box on the side where it breaks out. Then we wait for price promotions to create a pin bar indicating the rejection of the price in the extreme case of the Tokyo session. Once a pin bar candlestick pattern closes, we will place a pending stop entry order behind the pin bar to enter the market if the market direction actually reverses in our direction.

indicator

Template: 5-minute chart only

Trading session: Only in London

Currency pair: EURUSD, GBPUSD, EURJPY and GBPJPY pairs; Other EUR and GBP pairs may work but may require wider stops due to wider spreads

Buy (Long) Trade Setup

entry

  • Wait for the price to break out above the Tokyo session high based on the blue box
  • Wait for the price to go down and touch the blue line
  • Wait for a bullish pin-bar pattern to close
  • Place a no-buy order above the high of the pin-bar candle

Stop loss

  • Set the stop loss below the entry candle and below the top orange line

output

  • Close the trade as soon as the London session ends

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Sell ​​(Short) Trade Setup

entry

  • Wait for the price to break below the Tokyo session low based on the blue box
  • Wait for the price to go down and touch the blue line
  • Wait for a bearish pin-bar pattern to close
  • Place a sell stop order below the pin bar candle low

Stop loss

  • Set the stop loss above the entry candle and above the lower orange line

output

  • Close the trade as soon as the London session ends

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Conclusion

This is a profitable trading strategy that many traders employ. However, there are many different variations on this strategy. This is kind of a London breakout strategy. However, this version is the aggressive option. It has tighter stop losses, which enables it to have greater reward-risk ratios. It's not uncommon for this type of strategy to have a reward-to-risk ratio of around 4: 1, which is quite high by any standard.

There are other factors that you should also consider before trading this on a trading day. Some of these are press releases, the dynamics behind a breakout, and the overall picture trend. Having these filters can help you get better odds, but you can also get fewer trades in a week.


Forex Trading Strategy Installation Instructions

London Box Retest's Forex trading strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.

The essence of this forex strategy is to transform the accumulated history data and trading signals.

London Box Retest's forex trading strategy provides the ability to spot various specifics and patterns in price dynamics that are invisible to the naked eye.

Based on this information, traders can assume further price movements and adjust this strategy accordingly.

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xm account opening help "width =" 1160 "height =" 544

Click here for the step by step XM Trading Account Opening Guide

How do I install the London Box Retest Forex Trading Strategy?

  • Download London Box Retest Forex Trading Strategy.zip
  • * Copy mq4 and ex4 files to your Metatrader directory / Experts / Indicators /
  • Copy the tpl file (template) into your Metatrader directory / templates /
  • Start or restart your Metatrader client
  • Select the chart and timeframe in which you want to test your forex strategy
  • Right click on your trade chart and hover over "Template".
  • Move right to select the London Box Retest Forex trading strategy
  • You will see that the London Box Retest forex trading strategy is available on your chart

* Note: Not all forex strategies come with mq4 / ex4 files. Some templates are already built into the MT4 indicators of the MetaTrader platform.

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