The ICT trading strategy is something you have probably heard about. To put it simply, the approach relies on Asian session trading. Ideally, the forex market tends to stabilize during the Asian session before significant price fluctuations drive the London and New York sessions.
For successful ICT trading, you need to know everything about how the market works during the four trading sessions. However, do not fret if you are unfamiliar with the approach. Here we will go over the Asian Breakout Range Indicator and how it can be used to profitably trade breakouts during the Asian trading session.
What is the Asian Breakout Range Indicator?
In foreign exchange, the Asian session is often less busy than the London or New York sessions. During the London session, traders who use the “inner circle” method use this range to figure out the direction of trading. That’s because major price trends tend to take shape during the London session.
The indicator creates a series of colored boxes that can be used for trading the breakout in either direction. When the price first starts moving outside of the range you’ve set, you can enter the trade. The London session will see the formation of a trend if the price breaks the range to the upside. However, a bearish trend will emerge during the London session if the price falls below the range’s low.
The ICT Asian Range indicator is most effective on lower time frames, such as 1 hour, 15 minutes, and 5 minutes. The indicator may be used to trade currency pairings with the Japanese yen. To be more specific, the indicator is most useful with the following currency pairs: USD/JPY, EUR/JPY, GBP/JPY, GBP/USD, and EUR/USD.
New traders will find the ICT Asian Range indicator to be user-friendly. Knowing when the Asian range begins to develop is not something you need to commit to memory. As long as you can see the range as indicated by the indicator, all you have to do is wait for the price to break out of the Asian market consolidation before placing a trade.
Asian Breakout Range Strategy
The Asian Breakout indicator looks at data from a key part of the Asian trading session and then sends buy and sell signals that point in the direction of a price breakout. Any price movement that takes place above the session high or below the session low is interpreted as a buy signal or a sell signal, respectively. It’s smart to use the indicator in tandem with other methods and resources. Combining the ICT Asian Range indicator with a retouch or retest technique is one such example.
This implies you will enter when the price retests the consolidation period. In general, it’s not a good idea to enter a fresh trade if the session range is too large, since much of the price movement might have already taken place inside the session range. It’s important to note that if the breakout candle is too large, the price may retrace briefly before moving in the signal direction.
Buy Signal
- Open a buy order and trade the trend during the London session if the price breaks the upper boundary of the Asian price range.
- Place the stop loss 2 pips below the Asain range low.
- Aim for a risk-to-reward ratio of 1:2 or above for the take-profit target.
Sell Signal
- Open a sell order to trade the bearish trend during the London session when the price breaks the lower boundary of the Asian range.
- Place the stop loss 2 pips above the Asain range high.
- Aim for a risk-to-reward ratio of 1:2 or above for the take-profit objective.
Asian Breakout Range Indicator Pros & Cons
Pros
- A straightforward price action breakout trading technique that is simple to comprehend and use.
- Obtaining a risk-to-reward ratio of 1:2 is straightforward if the price breaks out during the UK session and progresses favorably.
Cons
- A false breakout is probable.
- Market volatility can be problematic.
- A wide trading range is unfavorable for trading since it reduces your chances of achieving a risk-to-reward ratio of 1:2.
- Breakout Point corrections are quite probable.
Conclusion
Nowadays, ICT is a common trade strategy. However, not everyone is familiar with ICT and the benefits it could provide. Indicators like the ICT Asian Range are ideal for finding promising trades in the fluctuating Asian market. Indicators are a must if you want to save time and get to work on your trading plan.
False breakouts, corrections to the breakout point, and overly optimistic expectations are the key reasons why many traders lose money with this strategy. Waiting for the breakout to materialize, trading the trend if it does, or waiting for a correction and seeing whether the price continues in the breakout direction, are strategies that are likely to provide traders with better success.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.
