Strategy Library

Session

London breakout

The Asian session is usually quieter, so its high and low make a clear range. When London opens, more traders arrive and price often breaks out of it. You mark the range, wait for the open and trade a clean break.

BeginnerForex majors, most often GBPUSD and EURUSDLondon openM5, M15
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Example 01

London breakout on a chart

GBPUSD · M15Asian rangerange, break

Asian range: 1.2702 to 1.2738Entry: 1.2751Stop: 1.2720Target: 1.2797 (1.5R)Sample candles, not market data

The rules

Setup
  • Mark the Asian range: the high and low from 00:00 to 07:00 GMT (adjust for daylight saving)
  • Skip days when the range is so wide that the stop leaves no room for your target
Entry
  • After 07:00 GMT, enter when a candle closes beyond the range high (long) or low (short)
  • Skip the break if the breakout candle is a pin bar pointing the other way
Stop
  • The middle of the range, or just beyond the most recent swing, or the far side of the range
Target
  • A fixed R such as 1.5R, or close at the end of the London session
Manage
  • Move the stop to breakeven at 1R, or take half off at 1.5R

Common mistakes

  • Getting the hours wrong. Daylight saving moves the sessions by an hour twice a year.
  • Trading straight into news. A release near the open can reverse the break.
  • Trading a range that is too wide. A wide range puts the stop too far away for the target.
  • Chasing the first spike. A fast move through the range that closes back inside is a false break.

When it's off

  • Call it off if price closes back inside the range
  • Skip the day if there is no break by your cut-off time
  • Skip it when high-impact news is due near the open

Words to know

Asian range
In the ICT course, the high and low printed between 20:00 and 00:00 New York time (some sources use other hours), marked before London opens as reference levels. Log what London does with it: sweep and reverse, break and run, or stay inside.
Breakout
Price moves through a support, resistance or range edge and a candle body closes beyond it. A wick beyond that closes back inside is a sweep, not a breakout.
False breakout
Price breaks beyond a level but cannot stay there and comes back inside, trapping breakout traders. It is only known after the return, never at the breakout candle's close.
R multiple
1R is what you lose if the stop is hit, and results are measured as multiples of it: making twice your risk is +2R, a full stop is -1R. R needs the initial stop; without a recorded stop it is unknown, not zero.
Breakeven stop
Moving the stop to your entry so a trade that turns closes at about zero instead of a full loss. It is a trade-off, not free insurance: it saves 1R on trades that fade after moving your way, but turns winners that come back to test the entry into 0R.
London open
When European trading starts, around 07:00 to 08:00 GMT.
Time stop
Closing a trade at a set time whatever the price.

When you make it yours, I'll ask what the rules above leave open. Start with one of these:

  • Which hours make your range, in which time zone, and how do you handle daylight saving?
  • Do you enter on a touch, a stop order, or a candle close, and on which timeframe?
  • What do you do if both sides break on the same morning?
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From DT Academy

What testing exists

No independent test of the London breakout was found. Treat it as a framework to define and test yourself.

Before you trust a backtest

  • Many professional traders risk under 1% of their account on one trade idea, and the common guideline is 1 to 2%.
  • The more versions of a rule you try on the same data, the more likely a good backtest is luck. Decide your rules before you test.
  • Include spread and commission, and practice on dates you have not looked at, before you trust a result.

Sources