London Breakout Strategy in Forex Trading
Trading with London Breakout Strategy
The London Overnight Forex Breakout Strategy is one of the most effective strategies for trading the forex market. It has made its presence felt as a top-winning trading system since it was released over 2 years ago. This system has been developed by Phil Campbell, an accomplished technical trader with many years experience. He has successfully made his trading method one of the best-selling trading systems in the world.
How does the London Overnight Forex Breakout Strategy work?
The key element in this system is the “oscillation” technique. Oscillators are price patterns formed on a time chart. These price patterns can be used to make predictions about future market activity. The London Overnight Forex Breakout Strategy applies this principle to the financial markets and produces very reliable returns.
Trading With the London Overnight Forex Breakout Strategy
Here’s how the strategy works. The oscillator pattern on the time chart is created by the user. The user wants to place a stop loss on a currency that forms a trend to identify a high probability trading opportunity. He wants to set the target price far enough away so that if the trend continues the loss will be large enough to absorb the profit made. At the same time he wants to set the stop price so low that if the trend continues the profit made will be small.
It is important to remember that the trend is a known fact in the markets and cannot be predicted. However the London Overnight Forex Breakout Strategy can be used to identify profitable breakouts. A profitable breakout is when the price of a security or currency pair continues to rise for a period greater than the selling price. If the trend continues and the profit made is larger than the initial investment made then the profit is termed a profit.
Most people who use the L.O.F. strategy to identify potential breakouts will place stops below the low and high points of the rising trend. Most traders will attempt to keep the stops below these points but this will result in a loss of overall profit. A trader who is successful in using the London Overnight Forex Breakout Strategy is one who can take advantage of small price movements to make a profit and not be tied to the well-known rules of thumb for identifying trends.
Successful trades employing the L.O.F. strategy are made using the candlestick charting method which relies on the analysis of price action to provide candlestick confirmation of trend reversals. Successful trading requires a keen understanding of price action and the reversal of trends. A candlestick can be used to confirm the reversal by drawing a trend line either horizontal or vertical through the closing price and the support levels of the previous day.
Chart patterns are used to determine if a reversal may be in the works. High volume tends to confirm trend reversals and to also provide an exit strategy. Conversely, low volume indicates that traders are holding out to wait for a reversal to move upward. Most experienced traders like to use candlestick charts to determine a trading strategy rather than the more common bar charts. Candlestick patterns provide much better accuracy than the bar charts in their ability to detect trend reversals and indicate strong trading opportunities.
The L.O.F. strategy is useful for finding breakouts in the market. Successful trading requires a keen sense of when the price is being driven by fundamental factors and when it is being driven by a particular indicator. The L.O.F. technique is used to identify when a particular indicator is providing sellers of support and resistance in the underlying trend.