GBP/USD is one of the most popular currency pair in Forex trading. Traders from Singapore and other places like to trade this currency pair due to its volatility.
The Forex trading strategy Big Ben is created for a currency pair GBP/USD and 5 minute time frame. The strategy is used during a day, so it is a daily trading strategy with the short time positions. Recommended time is 06.00 GMT, trading positions are opened not very often but with a great potential to bring high profits.
The Forex trading strategy Big Ben takes into account the closure of one market and opening of another one. Though Forex trading is active around the clock 24 hours a day, a trading day is divided into few trading zones.
According to the strategy of Big Ben, we are trying to catch the first daily market movement that occurs during the first few hours after trading opens in Europe. Impulse movement is important, especially for the British pound (GBP), since the closure of the London market (stock exchange) trading volumes of GBP currency are falling. Accordingly, at the opening of the London Stock Exchange, we get the “real” opening of the market followed by the increase of the trading volume for the British pound, rather than other currencies, which are distributed to other exchanges. This is the starting point of this Forex trading strategy.
Conditions for opening a short trade according to the Big Ben trading strategy:
1. Once the European market opens (06.00 GMT), we check if a new low for the currency pair GPB/USD was created.
2. After that, the price goes up, crosses the opening price and the upper limit is forming out. It must be a minimum of 20-25 pips higher than the candle opening.
3. Then again we see a movement of the pair GBP/USD down, and the price goes to the lower level range.
4. You need to sell at the break point when the price is 7 pips or more in the lower level of the formed band.
5. Stop Loss is better to place no higher than 40 pips from the entry point.
6. When the price went down on a distance equal to the value of Stop Loss, 50% of the transaction should be closed, and Stop Loss should be moved for the other half of the transaction to the point of opening (breakeven). Then you can watch your open position or use a trailing stop.
What is a trading strategy Big Ben based on? As mentioned above, trading with the currency pair GBP/USD has much smaller volumes when the stock exchange closed in London and Frankfurt. Volumes grow significantly during the European session, which allows seeing the demand-supply ratio for this currency pair.