(binned per thread starter's request) EURUSD trading using sessio

This thread will be an introduction to my process for trading EURUSD. Before i proceed i must say that I can't take credit for all of the stuff that i am about to write here but over the years i have added to the stuff that has already been written regarding the topic of session based trading.

A bit of an introduction about me, i have been trading since 2011 on and off and have only made meaningful progress over the last 4 years and have achieved consistency. i only trade EURUSD and the DAX and have a system for trading them both. The process that i have are a bunch of rules based on recurring patterns that i have observed in both of the instruments above. The system that i trade can be tweaked and armed for any other instrument but that will require monitoring the rhythm of the instrument you wish to trade.

The purpose for writing this thread, is mostly to keep a journal for all the trades that i take in EURUSD and to write my thoughts on trading and since i am unable to post my analysis in a dedicated thread in interactive trading. Trading is a very hard profession and i wish to present that reality through this thread. Also i want to use this thread to dispel the new found methods of trading that are all rage these days and the new guys are falling for them. These methods are basically copy pasting and re-labeling of the already existing methods like support resistance and price action. I want to present here the reality that trading system is basically a trader armed with a bunch of rules.

I am a believer that every experienced trader has a forte and that is how it is supposed to be, you cant possibly trade 10 different instruments and expect success. So this topic will be limited to discussing the patterns on EURUSD only. I shall be posting the necessary information to carry forwards this discussion in the next post.

What is a session?
A session is time period where the trading happens and this trading activity can have a recurring predictable outcome.

In FX the london session is the trading that happens within the active business hours of Europe/UK. Asian session is the trading that happens prior to london and will include the trading that happens in Tokyo/Sydney/Wellington etc. And US session is when you have the active hours in the US.

How do you mark the session?
You draw a separator between the trading that happens in the time period you are marking. The first attached image is the screenshot of the sessions marked by an indicator. you can see the separation between the session and also the period where the session is most active where the 2 sessions merge. That is the period where you can expect the most action in EURUSD.

Why care about the sessions?
The FX market doesn't care about your Support/Resistance/ Supply/ Demand MACD etc. It only cares about orders and session is the active period where the orders come and decisions are made by the traders and you want to only trade during that time to have a reliable trading outcome. Say you have an over the weekend news of war in middle east, the first guys that are going to react are going to be the people in Asia that will give clues of the sentiment that exists and that is what you want to know.

What is the sessions Trend?
The sessions trend is the direction where the price was going when the session was active. This is important because you never want to fade this move. If the session is up then it wouldn't care about your resistance level and may rip through it. This system is going to be about trading this sessions trend and being on the right side of it. Trend is your Friend.

What is london breakout?
London breakout is the break of the box around the Asian session High/Lows. Box can also just be a range that is existing before the london session starts. This is essentially a breakout of the nearest Support or Resistance. After the break happens the price moves in that direction forming the london sessions trend. This is the most well known system for trading in FX and has been tested to give consistent results.

What are pivot points?
Pivot points are support and resistance lines that are calculated mathematically using a formula. The daily pivots use the High Low close(HLC) for the last day, weekly pivots use the weekly HLC.

Why care about pivot points?
EURUSD and EURGBP loves pivots and respects the pivots. So you should probably care about them.

Attached is the image of pivot points plotted on the chart using an indicator. The indicator name is irrelevant as it could be any as long as it plots the levels using standard pivot points.

How do you trade pivots points?
Trade them like you would trade any support resistance. Use them to take profit while trading the sessions trend or to enter the sessions trend. If they line up with S/R even better. This is not the system but a brief description of how the pivot points are used along with it.

TRADE 27/05/24:
not expecting much on account of bank holiday, but the market has surprised me before so we may get a move.

Took a scalp trade 5 standard lots bagging 5 pips off a predefined low on the frankfurt bar scalp as it doesn't look like a runners market. Looks like a bullish session targeting 0860.

Trade reason buy off predefined support. Exit at predefined Resistance high.

I will be posting my tomorrow's trade with reasoning and add more posts explaining sessions trading in the coming hours.
Good Day.

Attached are 3 charts that only show the move that happened in the london session. The 1st image shows the move on Wednesday and Thursday and the 2nd image shows Friday and 3rd image shows Mondays move that is currently in the making. The chart was created using a custom indicator made using pinescript it helps me to block the noise of the surrounding bars. I do consider and view the surrounding candles but the strongest information is what is price doing in the current session and not what it did yesterday

The deduction is obvious from the chart it shows a trend and traders need trends to make money. Traders lose money when they go against it and we wanna capture the bulk of the moves that happen in these sessions preferably catching it at the low or high. If the session trends very strongly we can leave the entry untouched and wait for the next session, if that trends too in the same direction we have a runner that could become a good trade on the longer Timeframe.

How do you know in advance if the session will be trading for you to profit?
Can range or reverse as well

Most trading sessions follow a pattern. Depends on the market. However each market session typically follows a pattern within consolidation, manipulation, & distribution. Finding out which phase the market is on will help.

By trading i suppose you meant trending. If that is what you meant then the answer is, that i don't know in advance if the session will be trending or ranging. I can say with some degree of confidence though that the session will be sideways on some days but as a trader you can't ever say that i know for sure. Example is today i did not expect a trend even though i did write 0860 and session being bullish but i was not expecting a 20 pips move.

Most of the time the london session will be trending depending on what is the month of the year and are we trading in the last 10 days of the month stuff like that, the trending nature can be proven with a backtest very easily or you can just go back and look for yourself using your own eyes.

The answer to can it range and reverse is that EURUSD has a fixed rhythm and it reverses at fixed intervals so i can say with some degree of confidence when the reversal will happen and when it is likely going to range.

Finally i want to iterate we need to be humble when trading and can't be rigid. There are going to be days the trend will be there and we may be against it. In these cases the best strategy will be to have limitation on the loss you can take before you give up on that trading day or session. Remember this anything can happen in the next trade but over a series of trades the expected outcome will be positive.

While writing this reply i noticed that this thread was moved from systems to discussions which is odd since i am pretty sure what i am writing is not a discussion but a method and system for trading the EURUSD.

I will be writing a bit more later that will shed light on the questions that are asked.

That was what I meant.
The thread will be moved back after you gave more details about entry criteria, targets etc...

What is the london session?
The london session is the time when the traders in EU and UK are most active, there is a small window when it coincides with the NY session then extreme volatility can be expected.

What is the time i am using for london session and NY session?
My london session starts at 7 AM london time and the last candle is 12:30 London time. The session is still active after 1230 till 1630 but by then we are already into pre US session and any news and data coming out of the US has more weight so we can label that as US session. I have mentioned the time relative to the clock in london because i dont want to have any confusion when the day light savings kick in.

What is my time for US session?
My US session starts at 8 AM NY time and Ends at 1300 NY time.

What is the general behavior of any session?
All sessions either continue the last session or fade it. By fade i mean collapse within the last session. So plan accordingly. See image 1.
Al sessions will try to test the edges(nearest Hourly High low) before resuming or fading the trend.

What are the variations of the sessions in EURUSD?
see attached image and just imagine the same on bear side if you are selling.

What is new here man, i already could trade range or trend, why the hell do i need this fancy stuff to trade?
you can rely on the sessions trend when it forms and follow it, or capture it from the start if you have a strong bias for the higher timeframe.

Also when you know about the sessions you wont look at the chart the same way you do now and wont be placing random orders at a support or resistance zones in the middle of the night, because the guys that are going to decided if the support or resistance is working are going to show up in the next liquid session. So you have a support you had your eyes on last night will either be proven or broken by the london guys when the session opens tomorrow so let them decide.

Let's talk about the london breakout.
Please see attached image 2.

What is the system?
The system is memorizing the repetitive patterns in EURUSD around the london session and US session. Then using trend following techniques or buy low sell high techniques to enter the expected trend that is going to form in that session. Once the trade is entered we will hold the trade till the session ends or when the opposing price action forms that indicate the session is slowing down.

How do i control the risk when trading this system?
You will try to enter the session as soon as it starts in the first 2 hours of london start or 3 hours of US start once you have a clue about the sessions trend and if the execution is right you would have caught the day's High or low or sessions high low. But in event we are wrong about the sessions trend or the trend doesn't form and the market flips into a range we will either cut the position entirely or leave it based on where the entry is. We are going to need more examples in live trading but i have a few in my journal that i will post.
Proper risk management means that we will never lose more then what we can expect to make if we get a good trading session. We will try and cut the loss as soon as possible.

I will try to put it as mechanically so it fits the label of a system.