Quantum London Trading
Hello gang, it's been several years since I posted last and have come back to get in the swing of things again. I had been out with several severe personal health issues and also some family issues and have not been able to focus on my trading, among other things. I hope to go over some older threads and trying to answer questions, so please do not be offended or feel disrespected if I do not answer pm's or e-mails right away.
First things first, some of the things I've learned over the past decade and strategies posted on here are probably really outdated have have most likely run their course or have been modified so much you wouldn't even tell where it originally came from. So let's start with something simple and fresh.
We all know that it is very easy to overload a chart with the latest and greatest indicators making your chart look really pretty, but in essence worthless to trade on. I've learned to keep it very simple and let the fundamentals of price action and learning when the true trading begins. We see tons of London breakouts on the forums and this one is designed with a little twist. Instead of concentrating on the London open, we are setting up our trading scenario to exploit the flaw in the Frankfurt open. So here is the Quantum London Trading Strategy.
To set this up, download the indicator and template below. I am using OctaFX, but feel free to use whatever broker you desire. OctaFX is GMT+2, so make sure when we set this up your times are in sync. Open a 1 minute GBP/USD chart and load up the template. The template should have this saved on it but if not, place a vertical line on the chart at 5:00 am GMT (7:00 am on OctaFX).
As you can see, we have numerous little boxes on the chart covering all times of the day. But we are looking for one particular range of time here. As we know when the Tokyo opens and we see a little action there, then we going into a little ranging period most of the time after the new day starts at 00:00 GMT until the London open hits. But people forget the the Frankfurt open usually give us a little false sense of direction before the real trading direction is determined. The slowest volume of the day is normally between 4-6:00 am GMT. Here is our starting point right in the middle at 5:00 am. We will ignore any boxes formed before this time. Basically what we are seeing is an invisible ZigZag indicator in action but when a new hi/low is reached the old box stays on the chart instead of disappearing. This is what we will base our trades on.
Rules for entry
This is the simple part. We open a new trade at the opening of the next candle after a box appears, Blue boxes for long trades and Red boxes are short trades. We continue to add trades at each box that appears until we encounter an opposite colored box in which all the trades are closed at once when the new candle opens. This is the tough part: RESTRAINT!!!!! Even though it may look like there are numerous opportunities to re-enter other runs, don't! This is where you can get caught in a super long run during the London session only to get caught in the ranging period later in the day. Trading size is also very crucial as you may have 1 or 2 trades going or basket of 40+ or more. Here's how you can enter your trades (and it may be totally different for someone else depending on their risk factor):
Trades 1-12=.01 Lots
Trades 13-21=.02 Lots
Trades 22-29=.05 Lots
Trades 30-36=.13 Lots
Trades 37-39=.34 Lots
Trade 40 =.89 Lots
I am only using 40 levels as an example for this strategy. You can spread it out with more levels with lower lots to begin with then ramp it up on the last 1/4 or so, whatever floats your boat. I have a basket calculation for 80 levels that I use. But in this example if we ever got up to 40 trades, we'd only have a total of 3.52 lots in play. But remember, we are going to be using restraint here and taking only the prime first trade of the session.
So now lets show what the setup looks like using today's chart in the next post. All results posted do not include any spreads, slippage, commissions, or any other factors affecting the total number of pips.
There is an EA in development in the thread below if anyone is interested.
Okay, here is the setup from last nights trading. As you can see we had three (3) long trades around 9:00 am (7:00 am GMT) right as the Frankfurt open kicks in. Here you can see the false direction in play only to retrace back before the London open kicks in and the real trading starts up. Here is where we take advantage of that little flaw of misdirection.
Trade 1 was entered at the 9:02 candle @1.55920
Trade 2 was entered at the 9:03 candle @1.55901
Trade 3 was entered at the 9:04 candle @1.55912
All 3 trades were closed at the 9:58 candle @1.56044
Trade 1 made +12 pips
Trade 2 made +14 pips
Trade 3 made +13 pips
this is a pretty straightforward setup and we are done for the night. Over the next several weeks we'll post how each day using the actual charts for the previous day, good or bad.
I'll throw in another one. How about the day before, July 29th. I won't go into every entry point, just the pip totals. we had 13 long trades total. Trade 13 started our lot increase at .02 lots from post 1. Please keep in mind that these pip totals do not include any spreads, commissions, slippage, etc...
Trade 1 = +7 pips
Trade 2 = +8 pips
Trade 3 = +8 pips
Trade 4 = +8 pips
Trade 5 = +9 pips
Trade 6 = +14 pips
Trade 7 = +18 pips
Trade 8 = +18 pips
Trade 9 = +20 pips
Trade 10 = +19 pips
Trade 11 = +22 pips
Trade 12 = +21 pips
Trade 13 = +46 pips (23 pips X .02 lots)
Feel free to go back and go over any previous days. You will see some days are pretty quick and quiet, but on occasion you may run into a long run in which there's not a lot you can do about it but ride the train.
System seems as if it would lend its self very well to an EA.
Have you considered developing one?
Is one in development?
Have you calculated a pain threshold level in a strongly trending market where all positions would be closed?
An EA would assist in determining this level through backtesting.
Good luck to you on this adventure and may your account be swamped with GREEN pips.
Thanks for this, looks interesting!
Do you set any stop loss in place? What happens if the trades go against you? Do you simply wait for the opposite signal and close all trades?
Very interested in forward testing this however, my old ass can't stay up this late. So if someone writes an ea, I'll test it on a live nano account and report the results. No I don't care if it blows up, its a nano account. Until then I'll just follow along and see what you all come up with.
I'm in ------30 minutes to lift off -all systems go-
... until we encounter an opposite colored box in which all the trades are closed at once ...
I have downloaded the Quantum EA, but cannot attach it to my chart.
I know the correct way to add to MT4, as I do it all the time.
Has anyone else had this problem
I would really like to try it.
You should instead copy the file in the indicators folder ...
have you ever come across a situation where your basket doesn't close? I guess not. I just eyeballed backwards and saw that 22nd July would have been a hard day.
Also I see on some days we could use our discretion and simply close all trades when we have enough profit? 24th July wouldn't have given a signal until late in the afternoon to close the basket but that level was reached at 11am and then acted as resistance for a time before we finally got the red signal to close out the basket at around 4.30pm.
I guess you use your own discretion in closing baskets or are you very religious with your steps/routine?
I just looked on 30th July to see if I could see the same chart as you posted, I couldn't. There are no long signals on my chart. Only sells later in the day. So will it repaint if we close the platform or change timeframe?
I'm interested in knowing the maximum DD that Scott has seen and at what level we should begin to wet ourselves. lol.
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