Asian Breakout Strategy 2

Follow up on the Asian Breakout Trade

As I said in the last post I had a feeling this would not be something new. Some of us just take longer to discover them. I have since had phone calls and emails from other traders confirming they have been trading the system for a while.

Some of them only scalp 15 pips using this entry, still others aim for 40 pips on a trade. Now that the holidays are over and trading is back to normal I have had to change my thinking a bit on the system.

Some of the feedback I got from other traders using the entry method is don't trade this system if the overnight move is more than 60 Pips and others say more than 80 pips. I am inclined to agree with the 80 pip strategy. Don't use this entry method if the overnight move for the Asian and Pacific markets is more than 80 pips.

Another glaring problem is trading both the Eur/Usd and USD/Chf pairs as they are definitely the slowest moving pairs. The correlation between the two means, if you lose on one you are likely to lose on both. Some days you get a good run on both but it seems most days they just don't perform. Having said that I have reduced my entries to 4 pairs.

Two other changes I have made are, firstly only enter after the London opening, not Frankfurt. The hour difference between the two opening times often coincides with news from Germany causing some spikes in the market, picking up the order, only to reverse when London opens.

The second change is on the entry. I have changed that to 10 pips above or below the market.

Here is a look at today's charts using the Asian Breakout Method. All the charts can be expanded by clicking on them. The yellow coloured section is the overnight move, the blue section represents the profitable break out and the red coloured section represents a loss.

The first one is the GBP/USD Pair. Had I taken the trade with the Frankfurt opening it would have resulted in a loss as it just broke through the Asian high then reversed. The next move up easily bagged 50 Pips. The pair in fact continued to run up another 100 pips.

The next chart is the USD/JPY Pair and as you can see it ran 100 Pips down on the day. Another one I can kick myself for, as I closed out with 40 pips profit.

Eur/Jpy the first run down was 70 pips, easily hitting my 60 pip target before reversing. I was fortunate enough to catch this one a second time at 161.25 to go short and the trade is still running 200 pips up.

The last one was the Gbp/Jpy The first move down was 95 pips that I closed out on 60. Then it picked up the buy for 40 pips but was closed out on 25 pips profit.

The next two charts show the Eur/Usd and Usd/Chf just show how the days profits could have been lost on these two pairs.

The first one is the Eur/Usd that broke the overnight high and barely covered spread before reversing. It then ran down breaking the low yielding about 25 pips then reversing again. The first break was with the Frankfurt opening so it could have been avoided. The second could have been a 15 to 20 pips scalp.

The last one is the Usd/Chf Again this would have resulted in two losses as neither of the original breaks yielded much more than the spread.

This simple strategy yeilded 210 pips today without much effort. Today was also an exception rather than the rule as there are days when 1 or 2 pairs might fail. But overall the strategy has proved extremely profitable yielding more profits than losses.
Recap

• If the overnight move is more than 80 pips be weary as the market might not run to your profit levels.
• Don't trade the Eur/Usd pair and Usd/Chf together or better yet don't use this method to trade them.
• Place entries 10 pips above or below the overnight high and low.
• Only enter positions after the London opening