New York Breakout Strategy

The New York Breakout Strategy is one potential strategy to trade during the New York-US Forex Trading Session. The London Forex Session is the most active trading session on the foreign exchange market, followed by the New York Forex Session. A simple breakout trading strategy is to sell when a support level is broken and buy when a resistance level is broken. If you want to learn more about the New York Breakout Strategy and how to use it in the market, be sure to read this post to the end.

What is the New York Breakout Strategy?

As its name suggests, the New York Breakout is a forex trading strategy that works during the early New York time zone hours. Its purpose is to detect significant price moves between 1 and 3 p.m. GMT. The New York session is the last session of the day to open in a global context. A lot would have occurred in the Asia and London time zones already, and the markets in the New York time zone would be ready to go wild in response to everything that has transpired in those two zones. The initial two hours of trading on the New York Stock Exchange (from 1 p.m. to 3 p.m. GMT) are dominated by New York-based traders, who drive prices rocketing wildly. There is a lot of price volatility at this time, and most traders capitalize on it.

The idea behind this strategy is to place trades in the direction that the market participants are driving the currency pair at times when the London and New York time zones coincide. You can get the direction of the market by placing a 50-day simple moving average indicator on the chart. If the price is above the 50-day moving average, the current trend is bullish. The reverse is the case for a bearish scenario.

New York Breakout Strategy

The time considered for this strategy is exactly 16 hours following the opening of the market for that day. The last candle before the New York session starts is the 16th 1-hour candle of the day. Fundamentally, the closing price of the 16th 1-hour candle or the opening price of the 17th candle is recognized as the start of the New York session. The buy-stop order is then set 10 pips above the beginning price of the 17th 1-hour candle for the day, and the sell-stop order is placed 10 pips below it.

Switch to the 15-minute time frame and look for a market breakout on either side. As soon as one of the pending orders is activated, cancel the others. Since the 15-minute chart shows the breakout, the profit goals for higher timeframes should be lower. For this reason, the trader shouldn’t target more than 30 to 40 pips. The stop loss could be set to a maximum of 20 pips. The EUR/USD, GBP/USD, USD/CHF, and USD/JPY currency pairings are all great choices for this trading strategy.

Buy Signal

New York Breakout Strategy
New York Breakout Strategy Buy Signal
  • Open a 15-minute chart for a major currency pair, such as the GBPUSD or EURUSD.
  • At 7 and 9 a.m. EST, draw a vertical line on your chart.
  • Between the vertical line, draw a horizontal line at the high of the 1hr candle.
  • Place a pending buy-stop order 1 or 2 pips above the high point.
  • Wait for a breakout to occur and then possibly execute your buy pending order.
  • Place your stop loss at the low of the 15-minute candle that caused the break.
  • Aim for profit targets of 30 to 40 pips or according to your money management strategy.

Sell Signal

New York Breakout Strategy
New York Breakout Strategy Sell Signal
  • Open a 15-minute chart for a Major currency pair, such as the GBPUSD or EURUSD.
  • At 7 am and 9 am EST, draw a vertical line on your chart.
  • Between the vertical lines, draw a horizontal line at the low of the 1hr candle.
  • Place a pending sell-stop order 1 or 2 pips above the high point.
  • Wait for a breakout to occur and then possibly execute your sell pending order.
  • Place your stop loss at the high of the 15-minute candle that caused the break.
  • Aim for profit targets of 30 to 40 pips or according to your money management strategy

New York Breakout Strategy Pros & Cons

Pros

  • This trading strategy prevents you from overtrading since you only need to monitor one trading setup per day or a maximum of five trades per week.
  • The NewYork Breakout strategy is also suitable for traders with day jobs

Cons

  • Usually, the distance between the high and low is more than 50 to 60 pips, and if it eventually breaks, it may lack sufficient momentum to continue its trend.

Conclusion

The New York Breakout approach is a straightforward strategy used daily by traders. Traders should first ensure they are in line with all guidelines before taking any action. Before putting your money on the line in the real markets, it’s smart to test out these methods on a demo account first.