Forex Asian Range Breakout

Entry Logic

• Entry triggers on a 30-minute candle closing outside the 22:00 to 06:00 GMT range.
• Confirmation requires the breakout candle to have a body size of at least 15 pips.
• Timeframe is the 30-minute chart.
• Location is a breakout from the Asian session trading range.
• Market condition must be a clear directional move, not a ranging market.

Exit Logic

• Profit target is set at 1.5x the height of the Asian range.
• Scale out 50% of the position at 1x the Asian range height.
• Trailing stop is a 25-pip trailing stop activated after the first profit target is hit.
• Exit on signal failure if the price closes back inside the Asian range.
• Exit on an opposite signal from a valid breakout in the opposite direction.
• Exit on time expiration at the end of the London session (16:00 GMT).
• Exit on momentum loss if the price fails to make a new high/low for 3 consecutive candles.

Stop Loss Structure

• Hard stop is placed 10 pips below the low of the breakout candle for a long, or 10 pips above the high for a short.
• No soft stop is used.
• Maximum dollar loss is 1.2% of account equity.
• Maximum percent loss is 1.2% of account equity.
• Structural stop is placed at the midpoint of the Asian range.

Risk Management Framework

• Risk per trade is 0.6% of the account.
• Maximum daily loss limit is 2.4% of the account.
• Maximum weekly loss limit is 6% of the account.
• Maximum drawdown allowed is 18%.
• Risk-reward ratio requirement is a minimum of 1:1.5.

Position Sizing Model

• Sizing is based on a fixed fractional model (0.6% of account per trade).
• No volatility adjustment is used.
• Conviction sizing is not used.
• No scaling in.
• Scale out 50% at the first target.

Trade Filtering

• Avoid trading during major news events.
• Requires a clear Asian range of at least 25 pips.
• Instrument can be any major forex pair.
• Trade only during the London session (07:00-16:00 GMT).
• Avoid choppy, low-volume markets.

Context Framework

• Trend direction is determined by the direction of the breakout.
• Price should be on the same side of the VWAP as the breakout direction.
• Price should be on the same side of the 20 EMA as the breakout direction.
• Location is a breakout from a defined range.
• Higher timeframe (4-hour) should show momentum in the direction of the trade.

Trade Management Rules

• Move stop to breakeven after the first profit target is hit.
• Scale out at the first profit target.
• Do not add to the position.
• For fast moves, let the trailing stop run. For slow moves, consider taking profits manually.

Time Rules

• Optimal trading window is the first three hours of the London session (07:00-10:00 GMT).
• Avoid trading after 14:00 GMT.
• The London session is the most volatile for most major pairs.

Setup Classification

• A+ setup: Breakout in the direction of the daily trend with high volume.
• A setup: Breakout against the daily trend but with strong momentum.
• B setup: Breakout in a ranging market.
• C setup: Breakout with low volume or into major support/resistance.

Market Selection Criteria

• Instrument can be any major forex pair.
• Requires high liquidity and volume, typical of the London session.
• Volatility should be moderate to high.

Statistical Edge Metrics

• Expected win rate is 40%.
• Average win is 2.5R.
• Average loss is 1R.
• Profit factor is 1.6.
• Expectancy per trade is +0.4R.

Failure Conditions

• Strategy fails in low-volatility, ranging markets.
• Avoid trading on days with major news events that can cause false breakouts.

Psychological Rules

• Avoid chasing trades if the initial entry is missed.
• Stick to the plan and do not widen stops.

Advanced Components

• Market regime detection can be used to identify trending vs. ranging markets.
• A volatility filter (e.g., ATR) can be used to avoid low-volatility periods.
• No correlation filters are used.
• Multi-timeframe alignment with the 4-hour chart improves performance.

Location

• Strongest during the first few hours of the London session.
• Weakest during the late London session and the Asian session.
• The timing of the breakout is critical to success.