London DayBreak Strategy - Simple Trading Strategy that Works

London DayBreak Strategy – Simple Trading Strategy that Works

The London DayBreak Strategy is an intraday strategy that takes advantage of the London open trading range. The London DayBreak Strategy is probably one of the most simple trading strategy that works consistently for us. It does not take much of you time and certainly does not require you to be glues to the computer. Unlike any other daytrading strategy which requires the traders to be in front of his desktop through the whole trading day the London DayBreak Strategy only requires up to 15-minutes from your precious time. The power of the London DayBreak Strategy lies in the fact that usually if we have a strong breakout, either bullish or bearish the momentum tends to continue in the direction of the breakout throughout the entire session of the day. Without further ado, going forward you’re going to learn the ins and outs of the London DayBreak Strategy

The London DayBreak Strategy Explained

We like to keep things simple and in this regard, the London DayBreak Strategy only requires the use of two simple technical indicators: MACD and the 50 EMA. The preferred indicator is the MACD which is a trend-following momentum indicator and it will help us to identify and confirm that the London open breakout has the inertia and the fuel to continue in the direction of the breakout. Momentum based trading strategies usually require to exercise a high level of self-discipline and in this regard, we need to have clear-cut trading rules that will keep you away from second guessing yourself. The moving averages will be used to manage the trade and taking profit. This is a standard indicator that comes with your MT4 trading platform.

London DayBreak Strategy Settings

London DayBreak Strategy Settings

London DayBreak Strategy Settings

The preferred settings for the MACD indicator are the default settings. This is a standard momentum indicator and one of the most popular indicators among retail traders. The preferred currency pair that performs the best with the London DayBreak Strategy is the GBP/USD because during the London session the GBP crosses are the most active.

The London DayBreak Strategy is a very simple system to follow as the slope of the MACD histogram will tell us everything we need to know. The bulls are in control when the slope of the MACD histogram raises and the bears are in control when the slope of the MACD histogram falls. The London DayBreak Strategy rules are as follows:

  • Buy Signal: Buy at the London Open if we’re trading above the 50-EMA and the MACD histogram is rising above the signal line. Place your protective stop loss below the low of the day and take profits once we close below the 50-EMA.
  • Sell Signal: Sell at the London Open if we’re trading below the 50-EMA and the MACD histogram is falling below the signal line. Place your protective stop loss above the high of the day and take profits once we close above the 50-EMA.

London DayBreak Strategy – Long and Short Trade Example

The preferred time frame for our strategy is the 15-minute chart as we’re only looking to catch the intraday momentum. In the first trade example, we have the GBP/USD 15-minute chart and a long trading opportunity is presented.

London DayBreak Strategy - Long Entry Example

London DayBreak Strategy – Long Entry Example

In the chart below, we have another example, but this time, a short trading opportunity is highlighted. We can notice in both of the cases presented that as soon as our trade is triggered, there’s little to no drawdown and that’s usually indicative that the momentum is on our side.

London DayBreak Strategy - Short Entry Example

London DayBreak Strategy – Short Entry Example

And that’s it! Can you believe how simple this strategy is? Like mentioned earlier, this is one of the most simple trading strategy that works for us and hopefully, you will find this working well for you. Remember to use this on a demo account before going live.

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