The BEST London Breakout Strategy | OPTIMIZED using Stop Loss changes! 🚀
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- Опубликовано: 18 янв 2022
- Optimizing the BEST London Breakout Strategy to gain a greater return while keeping the system a 'set and forget'.
Going through how to optimally adjust for the best Stop Loss whilst reaching a set target is pivotal to reducing the number of failed trades beyond the natural swings of the market.
In today's video, I go through in detail EXACTLY how I have gradually optimized the London Breakout Strategy, and demonstrate how you can take the exact same format and apply these changes to your own strategies, too.
Don't forget to backtest and keep a spreadsheet.
Let me know in the comments how you get on.
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Quick up to date back test done for this month [Dec 2023] targeting 5R using a 'hard' SL of 10 pips, taking entries no later than 10am GMT.
13 trades - 12 Loss and 1 Win = NET R of negative 7. SR of only 7.7%.
Quickly done a hands off set and forget with this over the same month using the same SL but on M15 chart as it's something I have looked at before, basically buy and sell stops set at the extremes of the O/N range. Tested all targets from 1.5, 2, 2.5, 3, 3.5, 4, 4.5 and 5 and the 1.5R was the most profitable and had the best strike rate.
Quick data grab on this @ 1.5 was 17 trades, 8 win, 9 lose [47% SR] and yielding a +3R for the month of December. Zero skill involved at all. I don't trade this way, but always good to have some fresh data on the LBO strategy. I think it's good with GBPJPY too only using a 20pip SL. Happy to data grab this also. Cheers mate.
What a refreshing video ....a person who knows how to trade and teaches well .....also expose the youtubers who know nothing but hook new traders to get money out of them ....scamers. .....thank you so much.
Really appreciate the comment and the watch Julie :)
You Sir, are definitely not lazy, diligent and organised more like.
Best regards
U r genius !! Im searching for long for this MM to get optimal result, but lack knowledge to do this by myself.
I know this is key point other than strategy. Thank you again !!
Thanks for such a kind comment Indah! It's all about taking as much data as you can with the London Breakout... sometimes it doesn't make sense to take the trade apart from using the data where you know over the long term you make money from it!
After all this time the way you showed everyone how to truly optimize a strategy was so good compared to anything or any other type especially when you do the bos bos to choc stuff later truly good shit your the best if i ever become a wealthy trader were getting drunk
Hahaha thank you! Yes - I created the way I trade now from the LBO and Daily zone to zone. All spreadsheets and maths mate
Paul, I really appreciate how generous you are with sharing the knowledge you have and providing a great example of how to apply ones self to the task. I have excel, I like excel, but I haven't applied myself to maximizing data like you have shown. I think I have fallen into the (newbie) trap of jumping from one strategy to the next (more shiny) strategy (and repeat ...) without having the discipline to do what you have demonstrated - back test and refine. (Yeah, lazy!). Thanks 🙂
Thank you for saying that mate. Data is king, but refinement and execution is the emperor. I find a lot of random strategies to do purely based on backtesting data even if it goes against the day-trading strategy that I trade - the key is to trade these day in and day out (which sadly I don't always have the discipline to do). I'll build bots one day I think!
Great content. I really need a set and forget strategy. Based on this, I will start my own thorough backtesting, and will share results when available. One thing I´ll consider as well in my study is to check asian range in terms of pips, and see if there is any correlation between loosing and winning days.
Thanks again Vasco - the LBO works really well, as long as you target the nearest swing, and also use a set TP every day. Relatively low win-rate these days compared to how it worked for a few years, but the returns are still good.
Thanks for your vids!
You're welcome! Thanks for watching
truly amazing video easy to understand for newbie like me for sure gonna sub
Thank you mate. Glad you found it useful
I have several variants of this strategy ones performing better than others depending on the market regime backtested on 10 years of data and a sample size of 3500 trades and one filter that i found that increases all the performance metrics, sharpe ratio, recovery factor, winrate, DD, etc, of all these variants without exception is one to filter false breakouts, very simple and robust, and it is instead of entering at the open of the new bar when the close of the previous bar is outside the asian range, you enter when the previous weighted price is outside the range. The weighted price is = (high + low + open + close) / 4
Love it! Thank you for the insight! 🙌
Hello @mquant001, tres interressant, peux tu nous donner un exemple s il te plais ?
Hello Very interresting, can you give us an exemple ? please
Thanks for this Paul, very inspirational. Not working well lately, however on gold this works really good in march!
Thanks mate - really glad you're giving it a go. There's a guy on here who's become FTMO funded and is actually making more than me with it (he's absolutely solid in his mindset) - really awesome stuff!
@@TradeForexwithPaul he is using this strategy?
Really glad to see this..
Thanks alot sir we really appreciate, I'm gonna stick to this for in my FTMO challenge
Hi Abdulraheem,
I'd wait until my follow up video on this i think due Monday. It talkes about optimum take profit levels.
Also, do a free trial on FTMO first just so you understand it
Hello Abdul What are the news ?
Awesome video dude!
Thanks Aaron!
You can also put two positions and run it to the other side of the day befores range if it reverses a bit more advanced.nice vid bro👍
You certainly could, but be sure you don't get whipsawed out mate
simply excellent sir ,thanks
Thank you mate
hey Paul, I just backtested the whole june month, using a 10 pips SL and a 5R:R. the results are amazing, but while backtesting i found that taking partials at 3 R:R would increase the winrate, but also the GOA (for a total of Winrate = 56% and GOA = + 37,5%).
thanks for sharing your knowledge, you're really helping me in my forex journey! much love from Italy!
Really well done mate. This strategy works wonders when the market is really trending. Personally, I find that if looking at the weekly and you can spot that the market is going to move, you can sometimes hold your Monday trade through until Friday and take the whole week.
Very hard to do psychologically though!
Well done again mate and excellent job adjusting it too
@@TradeForexwithPaul Thanks for the tip, I'll add this consideration to my backtesting and share the results here
Top stuff!
@@TradeForexwithPaul I backtested from march to june 2022, the strategy works and has some great gains. the only thing is that i can't really understand how to understand if the market is going to move checking the weekly. (I'm also trying to find a way to avoid the few losing weeks, but I'm a bit lost). Would you have any suggestions / tips for this?
Hi Carlo, was wondering if now 4 months later, do you still tested this strategy after june? If yes, what were the rseults? ;)
Just brilliant !
Thanks Russ! 💪📈
👍Thanks, your videos -- particularly your last, strategy-summary made simple -- are useful.👍 Thought: are smart banks really going to let us retail joes get away with scalping their pants each morning, as the bros set up their big-bucks trading desks for the elitist day??
Great jobb! I have a question, why you are nor setting a limit order an 7:00 on Asia high/low,? you would get better SL (still 10pips but lower in a asia range.
Hi Fabian,
You'd get a LOT more stop outs as quite often price will poke out and reverse very quickly. Thats why I wait for a confirmed close on the 5 minute or a reversal on the 15 (reversal not shown in video).
I used to set a PO just like you suggested when I first started out but I was getting tagged, then tagged out way too often
@@TradeForexwithPaul I did back testing from 1.12.2021. got 38% profit and 40% win rate on 30 trades. Max 25pips move and SL below last low/high, sometimes 3-5 pips which resoult in few 5R-8R profit. Entry on a asia low/high after candle close - was waiting for pullback (misted 2 tradesbecouse of that). Can you precize what do you consider Asian range? Is german open included in your asia range? maybe use UTC time to leave no doubt. PS got a loosing streak of 6 trades in the end.
@@fabiow6 yeah I've just had that losing streak as well mate.
Asian range i have from midnight until 7am, then a break and close from there on the 5 min candle. Good win streak at start of December but bad lose streak the past week and a half.
Where may one find that spreadsheet?
The RRR slightly improves when we move the stoploss to 12 pips on EU. I got 13 wins out of 19. If closely monitored, we can improve the RRR to greater extent. May be take partials and leave the rest at BE for some more pips.
Really great job mate
I checked it on EU with the 10 pip stoploss. It worked 60:40 in the last 18 sessions including todays. If we close exactly at the given rrrr, it will easily give you almost 10% net return. I will test some more and share result.
Another great result!
do you try to instead to enter at the close of the breakout candle to put order action above the wick of the breakout order if it's a buy or the reverse if it's a sell ?
maybe you will avoid some loss
I like this suggestion - very good shout. Something worth backtesting for sure!
I hope that someone is willing to backtest this for 1 year. And the come up with a perfect sl setting. This should be automated lol.
I've tried to mate. Had a developer look at it for a while and we had a beast of an EA placing automatic trades for about 6 months
how does that ATR work I cannot see how your getting that equation your image is blocking the column in the right of the screen ? cheers
Sorry mate, ATR is just average true range of a set of candlesticks. Typically 1.5-2ATR is what SL people will use. I think in the end I was using 2ATR on this strategy, but it's evolved several times since and I no longer use indicators unless it's purely to highlight the Inside Bars
Great content! This was very helpful so thank you. Just back tested this for each day since Dec 6 with a profit target of 45 pips (decided this by using SMA instead of RMA for ATR). It’s been considerably more profitable than a 50 pip target since then. What is your formula for M Win? It isn’t clear from the video what that figure even represents and it is off screen when you type the formula.
Thank you Joe! Great job in changing the target - I typically divide the target by the SL to get the RR. I'm not quite sure i know what you mean - can you re-explain a bit please and I'll go find the spreadsheet
@@TradeForexwithPaul RR calculation was clear. When I first watched the video I didn’t realize that M Win was just the RR using the drawdown as the SL, hence my question, but it was obvious after another look at it.
@@DrBobTaint ohh! Sorry I see what you mean now. I confused myself 🤪
thanks
You're welcome!
Hello Sir, i have a question: so i just set an indicator sessions and set a London session on and play as video shows ?
Pretty much mate. I set alerts for when price comes back and dont enter until it does
Hi Paul! Can you combine this strategy with OB's?
Yes, absolutely. I actually keep modifying it as I go along and use OBs as a major confluence now when looking for a retest of the area
Thanks so much for the awesome content that you create. Do you still trade this strategy yourself and is it still profitable? I ask because I see that you have commented several times about how it no longer performs like it used to and I know that strategies can sometimes just stop working. I love this strategy but before spending dozens of hours back testing and optimizing I thought I'd ask if you believe its still worth the effort.
I have exactly the same question...
Have you finally started to backtest this strategy?
You're welcome! It's profitable, but how I trade now is an evolution of the LBO. It's worth learning that over the LBO if you're looking for larger gains
The law of large numbers is important in trading. Just using your best hunch following the trend will probably put you on the right side of a trade at least 50% of the time over time. If you have a risk reward of 1:1.5 you can lose 50% of the time and make money.
Spot on
Great Video, wich Session Indicator you are using?
Thank you! Its called Asian Session range and week and day
Hi i have a idea that i use on my charts its a higher time frame candles that you can zee on the lower timeframe. Its called HTF CANDLES BY PROSUM SOLUTIONS you can basically see what the 4 hr candles are doi g on the lower time frame chart. Really good for back testing
This is great - thanks for the suggestion mate :)
It may be of no importance, but doesn't the London session start 1 hour after the close of the Sydney session?
Have you considered adding a retest and continuation rule to the breakout? And do you ever trade fakeouts as well?
Its almost as though you've read my full trade plan 😉. Yes to all questions. As well as lower timeframes sometimes, especially on the retest. Higher timeframe for a possible reversal but the markets usually indicate a reversal is on the cards by the shaping of Asia
@@TradeForexwithPaul I just wrote a huge comment but f*cking RUclips wasn't able to publish it. Excuse my language. Here is the short version.
I am developing my own variation of this strategy there I currently close 70% of the trade at 1.5R, and trail the rest of the trade manually. I have 2 concerns that I would like your input on.
1. I notice that price often retraces around 1.5R, before potentially continuing. I want to limit my risk as well as capitalizing on my winners. I'm not sure yet how much of the trade to close at 1.5R, and how tightly to trail the stop loss.
2. Where do you get in when trading fakeouts? I have heard many people say as soon as price re-enters the Asian range, but it makes more sense to me to trade after a retest and continuation somewhere around the middle of the Asian range. Any thoughts?
Looking forward to join a trading community around this strategy soon.
Thank you for the amazing content. A lot of us have strategies but lack the ability to do proper back testing.
I suggest you create a short course on Udemy or other similar sites just on this strategy. You start with forex basics up to the full and optimized strategy, as well as give exercises in between to keep it interactive.
This is a great suggestion mate, thank you! Really liking it!
@@TradeForexwithPaul I vote for UDemy too.. I would have no problem paying thru the nose for your details training courses... Keep up the fantastic work.
The moving average you use for ATR is RMA(p). Know that RMA(p) = EMA(2*p-1) and EMA is an Infinite Responce filter, meaning the entire history is part of the calculation. The meaning of the parameter (p) for RMA and EMA is NOT a period. Because the size of history is limited, RMA(p) & EMA(p) first value is SMA(p) after the first p bars.
So if you really want to get the average of exactly 252 bars, set the ATR to use SMA.
This is epic - the level of understanding is brilliant. Thanks so much!
@@TradeForexwithPaul I have coded quite a lot of indicators, before learning about price action.
@@TheGandorX absolutely epic mate. Keep it up 🙌🏼
I've tested from 28th March until today and got -19%, Can someone confirm if they got similar results or am i doing something massively wrong? I used the basic strategy with the sl being placed on the swing
I think you might be right mate - it really goes through months of being excellent, then a month or two of being diabolical whilst the markets condense