Forex Trading and The London Open
As part of your Forex trading education, you need to examine and understand the effect market timings can have on trading flow.
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
Around London open time develop recognition skills and add them to your Forex trading education so you can capitalize on this productive market session.
The following questionnaire and checklist will help.
London Open Preparation
Check these points about fifteen minutes to half an hour before the London market opens:
Are the MACD indicators on the 4 hour and 1 hour charts in agreement? If they are not going in the same direction be very careful!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
What is the overall trend on the 4 hour chart?
Use your Fibonacci tool on the last swing high or low and see if price is approaching a key level, either a retracement or an extension.
Look to see where price is in relation to the 200 Exponential Moving Average (EMA) on the 4 hour, 1 hour and 15 minute charts. If price is above the 200 EMA on the 15 minute chart but below it on the 4 hour and 1 hour charts, then price is bucking the trend and you can expect it to go the other way at some point. (The opposite will be true if price is below the 200 EMA on the 15 minute chart but above it on the higher time frames.)
Is the market approaching a key fundamental announcement?
Looking at the candle that closes the first 15 minute period after London opens, do you see any distinctive patterns, or is the candle itself a doji or a hammer or any other shape indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
After waiting a few minutes from the time London opens, and you see a number of converging factors based on the analysis points given above, decide whether you are going to enter the market. Either:
trade
wait for clearer signals or a better entry point
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
You will be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
There is no magic surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
Finally, the trader learns the emotional and mental disciplines necessary for successful trading – no doubt the most important part of Forex trading education.
A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won’t be too long before the trader experiences the satisfaction of consistent profits on a regular basis.
