Most financial markets work with some basic ideas. So while there are some subtle differences, the basics are mostly the same. So whether it is stock, gold or Forex, fundamental ideas remain the same. And the fundamental idea is based on volatility. The more volatile it is, the more chances of earning traders have. And this Forex strategy is very popular, which has its roots in stock market. This strategy uses the volatility of a session. And it uses an indicator which is called London Forex rush indicator.
How volatility is vital for using London Forex indicator:
More a tool less an indicator, these have a very important role in trading volatility. It is a derivative of an open range breakout strategy. Now, this is again quite dependent on session timings. In stock market, as Wall Street opens, traders keep a watch for the first 30 minutes. This is the time when one can see immense swings. As you expect, because such a big market opens, there are wild trades. So as Wall Street’s bell rings at exactly 9:30 am, you see volatility. This is because this is the time when a trader’s emotions get the better of him.
So once this volatile period starts, traders keep note of all high points and lows. After about 30 minutes this gets over. And once this period is over, the trader makes his move. This is because after this time one can finally see the stable direction the market is heading in.
So even in Forex, this strategy attempts to identify the trend for the day. So once the volatile movements die down, one can see the real movements. This is how open range trading works. Now not every currency is suitable for this strategy. And there’s a reason why the tool is the called the London Forex Rush indicator. Yes, you guessed it right. It is to do with the British Pound.
Why the Pound?
Now there are quite a few reasons why GBP works well with London Forex rush indicators.
Firstly, there’s no other currency that is as volatile. And this method needs a currency that’s volatile after a session opens. So GBP is a very good option.
Secondly, GBP works best with other major currencies. So ideal pairs here can be the Pound/Dollar, Pound/Yen or Pound/Swiss Franc. In fact, it works well with Australian and New Zealand Dollar too.
Pairs with GBP are famous for their large moves. That means you’ll earn more pips with GBP in a pair.
The Tokyo connects:
Another thing to keep in mind is its connection with Tokyo. Yes, while volatility is a trader’s main concern, one has to think about volumes too. GBP has a low trading volume once Tokyo session opens. And of course, it trades a lot during London session. Keeping this in mind will help you understand when to trade it according to your time zone.
So when you think about using the London Forex Rush indicator, it is this volatility strategy you need to use. As a tool, it is tremendously useful. It helps you make more pips than other methods.
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