The One Minute Daily London Breakout System

A user of one of our example robots informed us that a system called 1 Minute Daily seemed to be getting people on the forex forums excited, and asked us to look into it.  Apparently, unlike so many other forex trading systems sold through ClickBank these days, this one doesn't come complete with a "robot".  The way it was described to us it sounded an awful lot like a member of the group of range breakout systems often referred to as "London breakout systems".

Unlike our existing example range breakout robot, these strategies don't trade any breakout that comes along. Instead they look to trade breakouts that occur around the time volume and volatility start to increase when traders in Europe in general, and London in particular, sit down in front of their large screens in the morning.

I know from my own experience that such systems can indeed be profitable. My interest having been piqued I investigated further. Apart from anything else it is not entirely beyond the bounds of possibility that if enough retail forex traders all jump on the same bandwagon in a short space of time a previously profitable strategy might need a touch of tweaking to remain so.  I will certainly be keeping a closer eye on Cable than usual after breakfast here in the UK from now on.

As you might possibly expect from a ClickBank eBook, the vendors of 1 Minute Daily don't appear to have an entirely firm grasp of their subject matter. In one of their other eBooks they even go so far as to ask:

Have you tried to trade breakouts? Forget it!

but nevertheless go on to describe a magical system for predicting such breakouts in advance. Apparently a crystal ball is not required!

To assist our enquirer we modified our MetaTrader expert advisor that uses "random" entries to enter the market at a non-random time instead. The time in question is the first breakout of a user configurable "overnight range". Here are the results of our first quick MetaTrader 4 backtest using this EA, on EUR/USD rather than cable:

Backtest results for our London breakout robot on EUR/USD for Q1 2010

If you would like to experiment with this expert advisor yourself, you can download the source code from our community forum.