London open trades Friday

I didn't trade at all on Friday so this is just an example.

I have been asked what happens if a London open trade in one direction fails.

The 6 pairs we mainly watch (gbp and eur with aud, jpy and nzd) trend well. The number of days where there won't be movement and they range completely sideways are few in number. Part of the reason is, as mentioned, they simply do trend well. Part of the reason is we are filtering moves out where there is no agreement, there is no general strength/weakness.

In the screen shots below going into London open (green line) both gbpaud and euraud are moving up making higher lows. This suggests aud is weak and both eur and gbp are strong. To choose which pair to trade we would look at other gbp and eur pairs. Which currency has other pairs moving up? We feel this filter has the best chance of picking a pair that will give some movement.

Should the trade fail we are risking around 15 pips. Then we will be looking at price action. In this example we were be looking to buy. Should that fail for us to consider a sell we'd be looking at our trade rules for price to move cleanly below the moving average (clean AB move), to test the lower range or break and test the lower range, to have a small BC retrace and to have the agreement across pairs to confirm strength/weakness.

Thankfully when the rules are met failed moves in both directions after London open in pairs that have strength/weakness are few in number. When the move does occur the pairs give trades far bigger than the loss of any initial failed move.