Forex Trading Education For The London Open

Part of your Forex trading education should include a study of the effect market timings can have on trading and volume.

Around the time of the London open there is much market activity and you can be presented with good trading opportunities.

Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.

The following questionnaire and checklist will help.

London Open Preparation

About 15 to 30 minutes before London open check the answers to these questions:

MACD indicators on the 4 hour and 1 hour charts - if they are not going in the same direction exercise great caution!

Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.

On the 4 hour chart what is the overall trend?

Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.

Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.

Is the market approaching a key fundamental announcement?

Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?

If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?

Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:

trade

wait for clearer signals or a better entry point

Increase your Forex education by carrying out this kind of analysis around the time of the London open.

You will be able to fine tune your analytical skills and be in touch with the underlying feel of the market.

Forex trading education does not depend on a magical formula. What it does entail is years of work, study, practice and experience, often hard earned through watching many trades go bad.

Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.

A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won't be too long before the trader experiences the satisfaction of consistent profits on a regular basis.