Let’s be honest, many forex traders don’t like trading the asian forex trading session…why?
For one simple reason only: price does not travel too much at all which simply means less trade volume compared to the London and New York forex trading session.
But don’t hate the Asian session just yet…and with this asian breakout strategy I will show you why.
Ok, first things first: don’t get confused...you are trading in london forex trading session but what you need to look at is the asian forex trading session to do that. I will explain a bit more below.
Currency Pairs : GBPUSD, GBPJPY, EURGBP, EURJPY
Forex Indicators: none
Timeframes: You can use 15, 30mins or 1hr timeframes.
If you’ve traded long enough in the forex market, one thing you will notice is that the the forex market during the asian trading session is usually thin and does not much volume and volatility.
Because of this, you will generally tend to see the Asian market will be in consolidation (traveling in a narrow range).
But that soon changes as soon as the London and European forex market opens, the volatility and the volume increases and this causes price to breakout of the Asian session market consolidation.
This Asian Session Breakout Strategy is designed to capture that breakout.
Now, you need to refer to this forex chart below when you go over the rules of this breakout trading strategy:
THE TRADING RULES
The trading rules for the 20 pips Asian trading strategy are really simple:
- At least 1hr before the London market opens, you need to identify the highest high and lowest low of the Asian trading session. The ideal situation would be that the Asian session was traveling in a tight range during that day. If the Asian session was in a good trend and not in a consolidation during the day, then if you tried to find the range, it would be too high…which means your stop loss would have to be very large to cater for that wide range! So only target days where you really see tight trading range during the Asian trading session.
- Place a buy stop and sell stop pending orders at least 2-3 pips on both sides of the consolidation.
- The stop loss of the buy stop order should be placed 2-3 pips below… on the other side where the sell stop pending order was placed and the stop loss for the sell stop order should be placed 2-3pips above the highest high of the consolidation…where the buy stop order pending order was placed.
- Set take profit targets for both pending orders at 20pips.
- Wait for a breakout to happen.
- When one of the pending orders is activated, then immediately close the other other that has not been activated.