Trading the London Open: Catching the Initial Move
The London open at 10:00 SAST (08:00 GMT) is when the European financial machine wakes up. London accounts for over 40% of daily forex volume, and the first hour typically sets the direction for the rest of the day. This creates a tradeable edge.
Why the London Open Matters
During the Asian session (02:00-10:00 SAST), markets are quiet. EUR/USD might move 20-30 pips in 8 hours. When London opens, that same pair can move 30-50 pips in the first hour alone. The liquidity injection from European banks, hedge funds, and corporations creates the day's first significant price movement.
Studies show that the direction established in the first 1-2 hours of the London session predicts the daily close direction approximately 60% of the time. This is a measurable edge.
The Asian Range Breakout Strategy
The most popular London open strategy is the Asian Range Breakout:
- Step 1: Mark the Asian session high and low (from 00:00 to 09:00 SAST). This is the "Asian range."
- Step 2: Wait for the London open (10:00 SAST).
- Step 3: If price breaks above the Asian high after London opens — BUY.
- Step 4: If price breaks below the Asian low — SELL.
- Stop: The opposite side of the Asian range (or midpoint for tighter stops).
- Target: 1× the Asian range height (measured from the breakout point).
The logic: the Asian range represents overnight positioning. When London traders come in and push price beyond that range, it signals a directional conviction that often continues through the session.
Which Instruments to Trade
The London open affects European instruments most:
- EUR/USD: The most liquid pair. Tightest spreads, cleanest breakouts. Best for beginners.
- GBP/USD: More volatile than EUR/USD. Bigger moves but more false breakouts.
- EUR/GBP: Less affected by USD moves. Good for diversification.
- DAX 40: The German index opens at the same time as London. Strong opening momentum.
- FTSE 100: The UK index. Less volatile than DAX but reliable.
- Gold (XAU/USD): Often sets its daily range during London hours.
Avoid: USD/JPY (Tokyo is closing, not opening — different dynamics), exotic pairs (illiquid), and commodities not traded on European exchanges.
False Breakouts and How to Avoid Them
The biggest risk with London open breakouts is the false breakout — price breaks the Asian range, triggers your entry, then reverses and heads the other way. This is especially common on days with major UK/EU economic data releases.
- Wait for the candle close: Do not enter on a spike. Wait for the 15-minute or 30-minute candle to close above the Asian range. If it closes back inside, the breakout failed.
- Check the economic calendar: If UK or EU data is released at 10:00 or 11:00 SAST (CPI, GDP, employment), wait until after the release. Pre-news breakouts are unreliable.
- Volume confirmation: The breakout candle should have higher volume than the Asian session average. Low-volume breakouts fail 60%+ of the time.
- Retest entry: Instead of entering on the breakout, wait for price to break, pull back to retest the broken level, and then enter. This filters out false breakouts but may miss fast moves.
Time Management
The London open strategy is time-sensitive. Here is the typical schedule:
- 09:45 SAST: Check charts. Mark Asian high and low. Check economic calendar for 10:00/11:00 releases.
- 10:00 SAST: London opens. Watch for breakout of Asian range.
- 10:00-11:00 SAST: Primary trading window. Most breakouts occur in this hour.
- 11:00 SAST: If no trade triggered, stop watching. The best opportunity has passed.
- 16:00 SAST: NY open — if still in a London trade, the NY session may extend the move or reverse it. Manage accordingly.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.