The London open breakout strategy is one of the most powerful techniques for forex traders, targeting the strong price movements that often occur at the start of the London trading session. As the world’s largest forex market opens, liquidity and volatility surge, offering ideal conditions for breakout trades.

In this article, we explain how the London open breakout strategy works and how to apply it effectively across different markets.

What is the London Open?

The London trading session officially opens at:

• 8:00 AM GMT (3:00 AM EST).

This session accounts for about 35% of total daily forex volume. The London open often triggers strong price movements as European traders react to overnight developments and position themselves for the day.

Price frequently consolidates during the late Asian session and then breaks out sharply when London opens.

Why the London Open Breakout Strategy Works

• Surge in Volatility: The market “wakes up” with a massive liquidity influx.
• Strong Trends Develop: Early moves often set the tone for the day.
• Clear and Predictable Timing: The London open happens at the same time daily.

How to Set Up the London Open Breakout Strategy

Here’s how to prepare:

1. Use a 5-minute or 15-minute chart for precise entries.
2. Identify the Asian session range or the price range formed 2–3 hours before the London open.
3. Draw horizontal lines at the high and low of that range.
4. Add a Volume indicator to confirm breakout strength.

Focus on highly liquid pairs like EUR/USD, GBP/USD, USD/JPY, and gold (XAU/USD) that respond strongly to the London open.

How to Trade the London Open Breakout Strategy

Here’s a structured approach:

1. Identify the Pre-London Range

• Mark the highest and lowest prices reached during the late Asian session leading up to 8:00 AM GMT.
• This creates the breakout levels.

Pro Tip: Tighter pre-London ranges often lead to stronger breakouts.

2. Entry Strategy

• Buy Setup:
  • Enter long when price breaks and closes decisively above the pre-London range high with increased volume.
• Sell Setup:
  • Enter short when price breaks and closes decisively below the pre-London range low with increased volume.

Strong breakout candles and volume spikes confirm reliable entries.

3. Stop-loss Placement

• For long trades, place the stop-loss just below the pre-London high or the breakout candle’s low.
• For short trades, place the stop-loss just above the pre-London low or the breakout candle’s high.

Tight stops reduce risk in volatile conditions.

4. Profit Target

• Target quick profits:
  • 20–40 pips for forex majors.
  • Alternatively, use a trailing stop if the breakout continues strongly.

Consider exiting near key intraday support or resistance zones.

5. Risk Management

• Risk only 0.5% to 1% of your trading capital per trade.
• Trade only clean, strong breakouts to protect against whipsaws.

Best Practices for London Open Breakouts

• Wait for Confirmation: Avoid jumping in too early. Let the first 5–15 minutes after the London open unfold.
• Check the Economic Calendar: Major news events (e.g., European economic data) can influence breakouts.
• Trade During the First Two Hours: Most volatility happens between 8:00 AM and 10:00 AM GMT.

Retest Breakout Variation

For safer entries:

• Wait for price to break out and then pull back to retest the broken level.
• Enter on confirmation of the retest holding with bullish (for longs) or bearish (for shorts) candles.

Retests reduce the risk of false breakouts.

Common Mistakes to Avoid

• Entering Without Volume Confirmation: Weak breakouts often fail.
• Ignoring Market News: Unexpected news during the open can cause sharp reversals.
• Overtrading: Stick to one or two clean setups and avoid chasing moves.

Advantages of the London Open Breakout Strategy

• High Probability Moves: Breakouts often lead to fast profits.
• Clear Timing: Traders can plan for a specific daily window.
• Works Best With Major Pairs: High liquidity ensures smooth execution.

Conclusion

The London open breakout strategy gives traders a structured and highly effective way to capitalise on one of the most powerful periods in the forex market. By clearly marking the pre-London range, waiting for a strong breakout with volume confirmation, and managing risk tightly, traders can consistently capture profitable early-morning moves.

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