Earlier I posted an article about trading the forex market using a breakout strategy immediately following the New York opening of the market. Now let’s take a look at a similar, very simple strategy that takes advantage of common price action patterns affected by the opening of each market around the world.
This strategy is designed specifically for the GBP/USD (thus why it is referred to as the “Big Ben” strategy). The time frame to begin observing the price movements of this currency pair starts with the Frankfurt opening (currently 1 a.m. EST, but you may have to check because sometimes it is 2 a.m. depending if it is daylight savings time or standard time). Begin monitoring the price at that time and be aware that the London market opens 1 hour later.
Trading volume is usually quite thin before London opens, so when the UK comes on board at that time, there is an obvious surge in trading. Observing for the Big Ben pattern allows you to take advantage of this time specific strategy.
The rules for this strategy are written below. The rules are written for trades going short on the GBP/USD, simply reverse the rules for long trades. The setup is simple:
1. Look for the pair to make a new low that is at least 25 pips from the Frankfurt opening.
2. Then look for the pair to reverse and trade 25 pips or more above the opening price.
3. Watch for the pair to reverse again to trade back below the intraday low from step 1 above.
4. Sell a break of at least 7 pips below the low. Place the initial stop no more than 40 pips above the entry price.
5. As the pair moves lower, trail the stop.
This can be a very effective strategy/price pattern to base your trading on. So whether you are available to trade the NY open or the London open (or both), you now have a very simple strategy for both times, each designed to assist you in taking advantage of the first big directional move of the mornings on both sides of the pond!
-Ann Pevey - If you like this simple strategy you will really like this one -> Method 1 Preferred Strategy. This one is very low risk and often captures 80 to 100 pips or more a week! It’s been performing well for me for a year now. Go Here.
Also see Ann’s other site -> http://www.forextiptrading.net for 24 hr. forex news feed and all the basics of FOREX.
June 4th, 2009 at 10:35 pm
[...] => The Big Ben Strategy netted over +120 pips quickly and easily with no threat of stopping out. Unfortunately I fell [...]
June 17th, 2009 at 8:40 am
There is obviously a lot to know about this. I think you made some good points in this subject. So, just want to say great job!
July 13th, 2009 at 9:44 pm
Ann,
I’m getting intrigued by your insight. I’m immersing myself through lots of reading of your very helpful information. What time chart are you using for this strategy?
July 13th, 2009 at 10:46 pm
Hi Paul, I honestly haven’t use this strategy myself very much lately at all because of the time zone. The “big move” would normally occur between 3:30 and 4:30 or 5 AM my time. At the time I had posted it, I had just learned about it and I had back-tested it over several months and it looked good. But from what I recall, when I did trade this strategy I would use a basic hourly chart and check what the open price was at the Frankfurt opening time (which currently is 1 am central time US time). I would use the opening price at 1 am to determine how to proceed with the rest of the strategy. The move doesn’t happen everyday, but if you can watch for it, then go for it, because when it does happen there are usually 80 to 100 pips to gain.
September 5th, 2009 at 6:57 pm
Hi. This is definitely very helpful info you have here and I appreciate the post.
January 16th, 2010 at 1:40 am
I’ve been investing for about 7 years up til now and I am perpetually keeping an eye out for quality blogs and posts. This one totally hits a note with me and I’m thinking about reproducing it on my own site. Would you give me your approval?
January 16th, 2010 at 2:07 am
Hi Andreas - if you go to http://www.articlesbase.com/find-articles.php?q=Ann+Pevey I have a list of some of my forex articles which can be reprinted.
January 18th, 2010 at 2:19 am
Normally I do not post on blogs, nevertheless I would like to say that this post really forced me to do so! really nice post.
March 23rd, 2010 at 11:06 am
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