OANDA:EURAUD   Euro / Australian Dollar
Rule #1 Define the London Trading Range
We’re going to use the range definition that takes into consideration only the body of the
candles, excluding the wicks.
Note* this trading rule can be adapted as you get more experienced at reading the price action.
This strategy works because the Asia trading range tends to attract buy and sell stops above
and below the trading range.
The bulk of buying and selling stops becomes an easy target for the smart money.
Remember that traders need liquidity to execute their orders.
And, the smart money is always in search of liquidity to fill their large orders. That’s the reason
why the smart money needs to trigger those stops.

Rule #2: The One-Hour before the London Open Needs to Generate the Breakout
Our backtesting results revealed that momentum really starts to pick up 1-hour earlier than the
actual London opening session.
There are some smart ways to trade this burst of momentum.
Let’s see some technical ways to trade the pre-London open.
We don’t need to guess in which way the market will break, we let the market tip his hand and
show us the way.
This is where things get interesting.
Let me explain…
During the London session we’re going to see the most traded volume thus the foreign
exchange market should really take off in one direction or another.

Rule #3 Price needs to fade
Immediately after the London session opens, we want to see the price fading the pre-open
If the move starts fading, we know it was a false breakout.
Smart money has used the pre-open move to trigger the stops above the range and now they
reverse the tie and start selling.
We want to see price pulling back into the range at the same speed as it went up.
Let me explain…
In simple words, the bearish momentum used to produce the false breakout needs to be equal to
the bullish momentum used to fade the pre-open move.
We enter our trade after the first 5-minutes have confirmed that the price is reversing.
Once this trade setup is completed, you should see a price formation that takes the V-shaped
form (or inverse V-shape).

Rule #4 Take Profit or Ride the Trend
We can measure the size of the Asia trading range and project from the top or bottom of
our range to get our profit target.
But, oftentimes this type of setup can lead to a trading day that can extend in the days to come.
Now, in this case, it’s wise if you employ other trading tactics so you can actually profit from this
In this example, the better take profit strategy would be to use a trailing stop.
You need to be ready to explore other trading methods to manage your trades.

Rule #5 Use a Time Stop Instead of a Price Stop
In order to fade the London breakout, you need to use unconventional trading methods.
In this regard, for our stop loss trading strategy we’re going to use a time stop instead of a price
The first time I’ve ever heard about the time stop concept was while reading the Market Wizards
Billionaire Hedge Fund manager Paul Tudor Jones one of the greatest traders of our times said:
“When I trade, I don’t just use a price stop, I also use a time stop.”
So, how to apply the time stop to the London strategy?
It’s very simple…
If, in the first hour after the London open the price didn’t COMPLETELY reversed the pre-opening
breakout, we exit the trade.
It’s simple as that, no further explanation is needed.


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