What is the New York Forex Trading Strategy?
The New York Forex Trading Strategy is a trading technique that is employed during the New York trading session. It may be during the London-New York session overlap or later in the New York forex session.
New York Forex Trading Strategy involves the application of the 15 Minute time frame and entry points are timed at breakouts which come with the high volatility of the two sessions overlapping. The London Trading session and the New York Trading session hence the name, “the New York Breakout Trading Strategy”.
Later in the New York session after the London session has long closed, a different trading strategy may be employed.
Ideally, most traders would switch to trading support and resistance levels because at this time, markets are ranging and volatility has lowered, making it difficult for prices to break such levels.
That said, the focus of this article is the New York Breakout Trading Strategy which can be applied in Olymp Trade’s 15 Minute time frame. Of course during the London-New York session overlap.
Note that the London and New York sessions are the sessions when most traders prefer trading. This includes the major players on the markets who play a major role in moving the markets – thus creating much market volatility. The reason that these sessions are favorable is due to the low spread that comes with, which translates to lower trading costs.
When does the New York Trading Session Open?
The New York session opens at 8:00 AM ET and closes at 5:00 PM ET while the London session opens at 3:00 AM ET and closes at 12:00 PM ET. Here, you can see that the two sessions overlap between 8:00 AM ET and 12:00 PM ET. It is during this overlap that our New York Breakout trading strategy comes into play to ace the markets.
The best Currency pairs to trade during the New York session include;
Trading the New York Breakout Trading Strategy.
The New York Breakout Trading Strategy involves waiting for a breakout of determined Support and Resistance in order to Sell or Buy.
Trade the New York Breakout Trading Strategy in the following steps;
- Choose a major currency pair.
- Set your chart into a 15-minute time frame.
- Draw vertical lines one hour before and after the time the overlap begins.
- Draw Support and Resistance lines.
- Place Buy and Sell Stop pending orders.
- Adjust your Stop Loss orders appropriately.
- Wait for a breakout to happen in either direction.
- Cancel the pending order not activated.
- Repeat the steps.
Let us see what each step entails in a more detailed discussion.
1. Choose a Major Currency Pair.
We suggested the Best Currency pairs to trade during the New York session. Refer to the list and choose any of the major assets like the EUR/USD. These currency pairs are tied to their countries and their performance will depend on whether their country is in session or not.
That said, you need the right currency to create an inimitable impact.
2. Set your Chart into a 15-minute time frame.
We are dealing with a trade bound to expire after an hour. The 15 Minute candlestick time frame then makes it suitable in establishing whether a breakout has occurred or not. Therefore, in about 4 Candlesticks the trade will be complete.
Observing candlestick behavior in the 15 Minute time frame is therefore the best for this strategy. It brings certainty where a breakout would be doubtful. You will see it clearly that the Candlestick has broken the Support or Resistance level or not, unlike lower time frames which may give a false impression by breaking too early for example.
3. Draw Vertical lines one hour before and one hour after the time the Overlap is bound to begin.
We said that the London and New York sessions overlap between 8:00 AM EST and 12:00 PM EST. Therefore for a start, you are acting around 8:00 AM. You will draw a vertical line at 7:00 AM and another at 9:00 AM.
This is the interval between which you will determine your Support and Resistance levels. Therefore, it is such an important step.
4. Draw Support and Resistance lines.
Identify the highest high of the candlesticks between the 7:00 AM vertical line and the present time and draw a horizontal line across it between the two vertical lines. That forms your Resistance line and level.
Identify also, the lowest low of the candlesticks between the 7:00 AM vertical line and the present time and draw another horizontal line across it between the two vertical lines. This forms your Support line and level.
5. Place Buy and Sell Stop Pending Orders.
Place these pending/automatic orders so that they are activated immediately a breakout occurs. This will ensure we catch the breakout early for a more profitable opportunity.
Place your Buy Stop Pending order about 1 or 2 pips above the Resistance line you have drawn. Similarly, place your Sell Stop Pending order about 1 or 2 pips below the support level you have drawn.
Given the fact that the Buy and Sell Stop pending orders are not exactly on the support and resistance levels, that gives an allowance of evading fake outs.
6. Adjust your Stop Loss Orders appropriately.
Adjust the Stop loss orders such that they lie on the opposite sides of the Pending order they correspond to. The Buy Stop Pending order’s Stop loss should be at the same level as the Sell Stop pending order. On the other hand, the Sell Stop Pending order’s Stop loss should be at the same level as the Buy Stop Pending order.
7. Wait for a Breakout to happen in either direction.
Now, wait for a breakout in either direction. It should go in either direction. That is why we placed both Buy and Sell Stop Pending orders in anticipation of whatever direction the breakout happens.
Once the breakout occurs, the price will activate the Pending order set on the side it happens towards, whether up or down. This then leads us to the next step.
8. Cancel the Pending Order not activated.
Has the breakout occurred downwards? Then it must have activated the SELL Stop Pending order – cancel the BUY Stop pending order. If the breakout occurred upwards activating the Buy Stop Pending order, then close the SELL Stop Pending order.
The break out is bound to drive significant price moves which may yield meaningful profits before the next trade is set up.
9. Repeat the Steps.
Once the trading session is over, then you are done for the day. You will repeat those steps the next day at the same time.
Wrapping up on the New York Forex Trading Strategy.
Did we say that the breakout must occur every day? No, we didn’t. If you realize that the breakout is not happening, then cancel both of your pending orders and wait for the next day.
You can opt to apply other trading strategies but not the New York Breakout Trading Strategy if the breakout fails.
To achieve up to $500 Daily with this strategy, consider opening larger positions.
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