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Guide to Trading Breakouts in the Asian Session: Capitalizing on Price Movements

If you don't have a consistent trading system yet, consider trying the breakout trading system during the Asian session. This system leverages price action without using indicators, focusing on the momentum of breaking the highest or lowest prices during the Asian trading session. Here's a step-by-step guide to implementing this trading system.



Preparation and Trading Setup

Before getting started, make sure you have installed the forex trading session indicator and selected currency pairs with a price range of less than 40 pips during the Asian trading session. Next steps:

  1. 1. Open a Chart with Time Frame M15, M30, or H1:
  • Use these time frames to see three colored boxes on the chart, representing the Asian session (green), the UK/European session (red), and the US session (blue).
  1. 2. Identify the Range of the Asian Trading Session:
  • As the Asian session ends, determine the highest (high) and lowest (low) prices of that session.
  1. 3. Place Buy Stop and Sell Stop Orders:
  • Put a buy stop 2 pips above the highest price and a sell stop 2 pips below the lowest price of the Asian trading session.
  1. 4. Set Stop Loss and Take Profit:
  • Set the stop loss 2 pips above the highest price (for sell) or below the lowest price (for buy) of the Asian session.
  • Determine take profit using a risk/reward ratio of 1:2. For example, if the Asian session range is 30 pips, the take profit should be 60 pips.

Example Implementation

Suppose the price successfully breaks the lowest price of the Asian session; then, the sell stop will be triggered with the stop loss set above the highest price of the Asian session. Conversely, if the price breaks upwards, the buy stop will be triggered with the stop loss set below the lowest price of the Asian session. The profit target can be twice the distance of the stop loss.

Ideal Trading Conditions

This system is ideally applied in trending conditions, both upward and downward. When the price trend is upward, look for buying opportunities from the breakout of the resistance range of the Asian trading session. Conversely, when the price trend is downward, look for selling opportunities from the breakout of the support range of the Asian session.

Advantages and Disadvantages

Advantages:

  • Simple and easy to implement, suitable for beginners.
  • Potential for achieving high profit targets when the price is in a trending condition.

Disadvantages:

  • Vulnerable to losses in choppy market conditions.
  • Ineffective in Asian trading ranges that are too high (more than 40 pips).
  • Caution is needed for specific pairs like USD/JPY, which tend to move significantly during the Asian session.

Although this system has its drawbacks, it can be an option for traders seeking a straightforward approach to capitalizing on price movements during the Asian session. Always conduct testing and evaluation before fully implementing it in real trading.
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