Best Short-term Strategies: GBP/JPY Range
Author: Andrey Goilov
Trading GBP/JPY might be quite tricky because it is so volatile: its average volatility range exceeds 100 points. However, closer to the Asian trading session the market calms down and sometimes forms a range, pushing the pair out of it by the main trend.
A short-term strategy called GBP/JPY Range uses no indicators; it includes pending orders which shortens your time in front of the terminal. Moreover, working by the strategy, the trader does not choose or forecast the market direction but simply follows the price.
The article is devoted to the idea of this strategy, its trading principles, and to generally checking whether the authors of the strategy have managed to pacify such a volatile pair.
Description of GBP/JPY Range
For trading by the strategy, we use the M15 chart of the GBP/JPY pair. Stick to the closing time of the American and opening time of the Asian sessions. This is 23:00-02:00 terminal time.
Draw horizontal lines through the high and lows of the price in the mentioned timeframe. Then place pending orders for breakaways a bit higher and lower than the drawn levels. If one order gets triggered, delete the second one. If none is triggered over 4 hours, delete both and try again on the next day.
Note that the narrower the corridor, the less it is possible that a strong movement will develop. If the range is quite wide, it is unlikely that the movement will continue after the breakaway. In practice, higher volatility changes for lower, then for higher, and over and over again. It is important that we notice low volatility to catch higher volatility later.
If the channel is wide, volatility is high, hence, there will be no movement after the breakaway. By the rules of the strategy, if the channel is over 70 points wide, you should not trade.
Selling by the GBP/JPY Range
As an example of a selling trade, let us take a breakaway of the channel downwards. We mark the beginning of the channel at 23:00 (11 p.m.); the low of the channel is at 152.74, the high is around 152.86. At 03:00 (3 a.m.) the lower border of the channel was broken, and the price went down. Place a Take Profit at the level of two ranges. This time, the movement was strong and triggered the TP at 152.50.
https://blog.roboforex.com/wp-content/uploads/2021/08/Pic-1.png
In this strategy, we need a Sell Stop pending order as it opens a selling position below the current market price. By the strategy, we must place it 2 points below the low of the range. In our case, it is 152.72.
https://blog.roboforex.com/wp-content/uploads/2021/08/Pic-2.png
Place a Stop Loss behind the high of our range to avoid random price movements against our position. Hence, we place it at 151.95.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
Author: Andrey Goilov
Trading GBP/JPY might be quite tricky because it is so volatile: its average volatility range exceeds 100 points. However, closer to the Asian trading session the market calms down and sometimes forms a range, pushing the pair out of it by the main trend.
A short-term strategy called GBP/JPY Range uses no indicators; it includes pending orders which shortens your time in front of the terminal. Moreover, working by the strategy, the trader does not choose or forecast the market direction but simply follows the price.
The article is devoted to the idea of this strategy, its trading principles, and to generally checking whether the authors of the strategy have managed to pacify such a volatile pair.
Description of GBP/JPY Range
For trading by the strategy, we use the M15 chart of the GBP/JPY pair. Stick to the closing time of the American and opening time of the Asian sessions. This is 23:00-02:00 terminal time.
Draw horizontal lines through the high and lows of the price in the mentioned timeframe. Then place pending orders for breakaways a bit higher and lower than the drawn levels. If one order gets triggered, delete the second one. If none is triggered over 4 hours, delete both and try again on the next day.
Note that the narrower the corridor, the less it is possible that a strong movement will develop. If the range is quite wide, it is unlikely that the movement will continue after the breakaway. In practice, higher volatility changes for lower, then for higher, and over and over again. It is important that we notice low volatility to catch higher volatility later.
If the channel is wide, volatility is high, hence, there will be no movement after the breakaway. By the rules of the strategy, if the channel is over 70 points wide, you should not trade.
Selling by the GBP/JPY Range
As an example of a selling trade, let us take a breakaway of the channel downwards. We mark the beginning of the channel at 23:00 (11 p.m.); the low of the channel is at 152.74, the high is around 152.86. At 03:00 (3 a.m.) the lower border of the channel was broken, and the price went down. Place a Take Profit at the level of two ranges. This time, the movement was strong and triggered the TP at 152.50.
https://blog.roboforex.com/wp-content/uploads/2021/08/Pic-1.png
In this strategy, we need a Sell Stop pending order as it opens a selling position below the current market price. By the strategy, we must place it 2 points below the low of the range. In our case, it is 152.72.
https://blog.roboforex.com/wp-content/uploads/2021/08/Pic-2.png
Place a Stop Loss behind the high of our range to avoid random price movements against our position. Hence, we place it at 151.95.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
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