As part of your Forex trading education, you need to examine and understand the effect market timings can have on trading flow.

Around the time of the London open there is much market activity and you can be presented with good trading opportunities.

Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.

The following questionnaire and checklist will help.

London Open Preparation

Check these points about fifteen minutes to half an hour before the London market opens:

MACD indicators on the 4 hour and 1 hour charts – if they are not going in the same direction exercise great caution!

If there is divergence on the 4 hour, 1 hour or 15 minute charts on the MACD indicator, look for other signs that price may go in the direction of the divergence.

Looking at the four hour chart, ask yourself, what is the overall trend?

Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.

Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.

Are any fundamental announcements due?

As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji’s or hammers indicating price exhaustion?

If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?

After waiting a few minutes from the time London opens, and you see a number of converging factors based on the analysis points given above, decide whether you are going to enter the market. Either:

trade

wait for clearer signals or a better entry point

Increase your Forex education by carrying out this kind of analysis around the time of the London open.

You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.

Forex trading education does not depend on a magical formula. What it does entail is years of work, study, practice and experience, often hard earned through watching many trades go bad.

At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times – the hardest and most important aspect of Forex trading education.

A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won’t be too long before the trader experiences the satisfaction of consistent profits on a regular basis.