How I trade London Session (84% WR Strategy)

Summary

In this video, a seasoned trader shares their proven strategy for trading the London session, focusing on capturing high-probability moves daily. The strategy, consisting of three simple steps—finding direction, identifying areas of interest, and using entry models—helps achieve an 84% win rate. The trader emphasizes the importance of aligning multiple timeframes and stacking confluences to improve trade accuracy. By examining the previous Tokyo session and understanding market structure, traders can better predict price reactions and avoid common pitfalls. The approach is geared toward pullback traders but offers valuable insights for all trading styles.

Takeaways

• 😀 The London session is the highest volume trading session, offering significant opportunities for high-volume strategies.
• 😀 The London session tends to favor breakout and higher volume strategies, while the Tokyo session is more range-bound.
• 😀 A trader should always keep in mind how the Tokyo session moved, as it influences the price action during the London session.
• 😀 The three-step strategy for trading the London session involves: 1) Identifying the overall market direction, 2) Finding an area of interest, and 3) Using an entry model to place trades.
• 😀 When determining direction, it's helpful to look at the Tokyo session range and assess whether price is near the top (sell) or bottom (buy) of that range.
• 😀 Price movements are like a push and pull, where strong moves often result in corrections, leading to opportunities for pullback traders.
• 😀 Aligning high-timeframe market structure with low-timeframe price action is crucial to avoid conflicting signals and improve trade accuracy.
• 😀 Areas of interest are defined by past price reactions such as highs, lows, and breakpoints, and these levels are key for identifying potential trades.
• 😀 Entry models include simple strategies like break-and-retest or shifts in market structure (e.g., breaking a low then a high).
• 😀 Using multiple timeframes (e.g., 5-minute, 15-minute, and hourly) to confirm the direction and structure of the market increases trade reliability.
• 😀 Stacking confluences from different timeframes and indicators (e.g., DXY for confirmation) can significantly improve win rates, with an average risk-to-reward ratio of 1.5:1.

Q & A

What is the main focus of the trading strategy discussed in the video?

The main focus of the trading strategy is to successfully trade the London session using a simple three-step approach: identifying overall direction, finding areas of interest, and waiting for an entry signal based on market structure.

How long has the trader been trading the London session?

The trader has been trading the London session for over three years.

What is the trader's win rate with the discussed strategy?

The trader has an 84% win rate with the simple three-step strategy for trading the London session.

What are the characteristics of the London session compared to other trading sessions?

The London session is known for having the highest trading volume, which leads to large price moves. In contrast, the Tokyo session tends to have lower volume and more range-bound price action, while the New York session is volatile with many news releases.

What is the best time to trade the London session for a breakout trader?

For a breakout trader, the best time to trade the London session is around the London open (8:00 AM GMT), as it tends to have strong directional moves.

When does the trader prefer to trade during the London session and why?

The trader prefers to trade in the third hour of the London session, as it provides better pullback opportunities, which aligns with their trading style.

How does the Tokyo session influence trading during the London session?

The price action from the Tokyo session heavily influences the London session. The trader looks at the Tokyo session's range to determine whether to focus on buying (if near the bottom) or selling (if near the top) during the London session.

What does the trader mean by 'aligning timeframes' when trading the London session?

Aligning timeframes means ensuring that both lower-timeframe and higher-timeframe market structures are in agreement. For example, if the higher timeframe is bullish, the trader looks for bullish signals on lower timeframes to confirm the trade.

What is the role of 'areas of interest' in the strategy?

Areas of interest refer to key levels where price has previously reacted. These levels are drawn as zones on the chart, and the trader waits for price to reach these levels before looking for a potential trade setup.

What does the trader look for as an entry signal after identifying an area of interest?

The trader looks for a structure shift, such as a break of a previous low or high, or a confirmation through a candle pattern that aligns with the overall market direction. They wait for this confirmation before entering a trade.

Why does the trader emphasize using multiple confluences in the strategy?

The trader emphasizes using multiple confluences because stacking several confirming factors increases the probability of a successful trade. This includes aligning timeframes, observing market structure, and using technical indicators like DXY for added confirmation.

How does the DXY (U.S. Dollar Index) play a role in the strategy?

The DXY is used as an additional confirmation tool. If the DXY is showing bullish strength (breaking highs), it aligns well with buying assets like gold. The trader uses DXY along with other factors to ensure the trade setup has strong confirmation.

What risk management advice does the trader offer?

The trader advises always using a stop loss to protect your position. The stop loss should be placed above or below recent market structure (like previous highs or lows), and the target should be based on key levels or areas of interest.