Breakout strategy

[phreak]

I usually start trading between 2am and 3am Eastern time, just before European opening. I've noticed a pattern that seems to allow to make small profit on a regular basis. I would like to know is there is any theory behind it or it's just a coincidence.

For a few hours before 1am-2am the trading normally has narrow range (GBP/USD for example), then around 1am - 2.30am it breaks out of the narrow tunnel and goes up or down until European trading starts at 3am. Then it changes direction exactly at 3am and goes pretty fast for at least 30 pips. Sometimes you can make good profit his way if it continues in the same direction. But even if it changes direction again soon, you can still make 20-30 pips without any trouble (just close positions promptly once you notice that). The best pairs for this strategy are GBP/USD and USD/JPY in my opinion.

Any comments are appreciated.

[Maji]

hello phreak

I am no expert, but from what you described, it appears to be a variant of the Opening Range Breakout (ORB) philosophy. It is one of the most profitable day trading philosophy... at least that is what I have been told. A lot of professional traders trade variations of the ORB. If you can, demotrade your findings for a month and see how it does. If you want the real excitement of trading, trade the minis and see how you fare.

You have probably stumbled across a nice setup, and hopefully can make money out of it.

Good luck
Maji

[sidekick]

Howdy Phreak,

for a similar discussion goto :

http://www.moneytec.com/forums/showthread.php?s=&threadid=4443&perpage=15&pagenumber=1


Cheers