Daytrading in the currency market is one of the most fascinating and difficult kinds of trading. Big Arm (50:1 or even 100:1), which is practiced in this market makes it possible to make big profits, but also increases the losses. This makes the timing of the transaction and critical to success. Fluctuations in the futures currency market forced traders - beginners to develop strategies that require discipline and are not based so much on the overall dynamics of the market, but rather on the price movement on a particular currency, and the individual market "microstructure."
The strategy of "Big Ben" is a good example of this approach to trading. This trading technique for a day trader that allows you to make a profit, especially considering the transition of trading from one market center to another on a 24-hour forex market.
The strategy of "Big Ben" aims to catch the first directional intraday move that often occurs during the first hours after the opening of trading in Europe (Frankfurt and London) to 01.00 ET. Best of all, this strategy works with the British pound (a couple of GBR / USD). Because, when trading in London closed, the volume of trades on this pair is small, the opening of trading in London is for her "real" opening of trading. Use this moment as the basis for the trading system. As seen in Figure 1, during the Asian session, transactions on this market segment is almost absent, whereas during the European session deals on GBR / USD is about a quarter of the total number of transactions.
For other currency pairs, the opening of trading in London is not the key, as their popularity is distributed to other financial centers. So for a pair of USD / JPY, which in Asia accounts for 78% of the volume of transactions, the volume segment in Europe is only 17%.
Before I explain the logic behind our methodology, let us turn to the rules of the auction.
The rules (these rules to the game in the "short", but can be modified to be used for long positions):
Set up.
1. After the opening of trading in the London / Frankfurt a couple forms a new band minimum, which must be at least 25 pips below the opening price.
2. After a couple of turns, passes the opening price and forms the upper limit of the range, which should be at least 25 pips above the opening price.
3. After that pair again unfolding, this time down, and reaches a minimum intraday, which is formed in step 1.
4. Sell at break (at least seven pips) specified minimum.
5. Filling the order, place a protective stop is not higher than 40 points from the entry price.
6. When the price moves down a distance equal to the distance from the entry price to the stop, close half the position and move the feet.
These simple rules allow you to profit from the usual behavior of the currency pair at the opening of trading in London.
Logic
As noted above, the trading volume on the pair GBP / USD rate is significantly lower in those hours when trading in London and Frankfurt closed. Most transactions in the pair takes place during the European session. This makes it possible to get a good picture of supply and demand on the pound.
Trading System "Beg Ben" is based on the fact that in early trading big dealers tend to bring into force the foot, which are located on both sides of the price, which leads to the formation of intraday highs and lows. When these orders are executed, the market returns to its original direction, which also caught by this trading strategy.
The logic underlying the system should be familiar to those who trade futures SP, so they often use different systems of the opening range breakdown to catch the first real movement of the stock market at the opening of trading in New York.
Commercial examples of
Figure 2 shows a five-minute chart illustrating the opening of trading in London, and the use of "Big Ben". The first vertical line indicates midnight Eastern Time. The second vertical line indicates the opening of trading in Frankfurt, the third line shows the time when London players begin to act. At the opening of trading in Frankfurt sterling went down, which led to the triggering of some sell-stops. During the first 15 minutes of trading in London, there was a turn up and the formation of intraday peak. Then, when feeling out of the market has stopped, the price was able to move in the real direction. As a result, sterling fell to 90 points before buyers came into the game.
Figure 3 shows an example of a strategy in cases in which a wide range of anomalous discoveries. In this case, after the opening of trading in London, sterling was trading with an increase of 26 pips, setting the top of the range. After that he was under pressure and fell by 65 pips to a minimum at 1.8518 (horizontal line). After that there was an increase of 50 pips, so before sterling fell below the previous low. Despite the wide range of discovery, all the rules set out above also apply to this situation.
