I trade the London Session on GER40 and I’m normally done after an hour and a half — although there are plenty of times when the action comes later in the day. I choose to limit my time in the market.
The process starts with a weekly review of the higher time frames — D1 and H1 — but my main interest is M15 for direction and target, and M1 for entry. I’ll try to align the trade with Elliott waves, but this post is focused on the trade setup itself.
The two setups
Both setups are variations of the same idea: buy the dip in an uptrend, sell the rally in a downtrend. The difference is how the corrective move resolves.
Accelerated Correction (AC) — price corrects in a tight, fast pattern before resuming the impulsive move.
Level Flip — a key level (Day Open, ONH, ONL, etc.) is briefly broken and then reclaimed, signalling the correction is done.
Pre-trade checklist
- Check for news and higher time frame (H1 & D1) for potential reversal levels and trend direction
- M15 for target, favourable price action and direction
- Strong M1 move in the direction of the trade
- Retrace with an AC or Level Flip
- Confluence — usually a strong level or combination of levels
- Setup candle(s) confirming the entry
Trade example
M15 — direction and target
M15 — break of ONH from LO, strong impulsive candles up
Looking at M15 first. From London Open we see a break of the Overnight High (ONH), followed by strong impulsive candles up. That gives me the direction and a target level to work towards.
M1 — entry
M1 — Day Open flip with doji entry, second entry on ONH break
On M1 — a flip of the Day Open level with price holding above it. I recognised a pattern and took a low pip risk trade on the doji with the stop just below the Day Open. A second entry presented itself when price broke above ONH for the second time.
Trade management
After a break above the previous high I moved the stop to break-even. I was lucky not to get stopped out when price retraced briefly below ONH — it held. The low pip risk on entry gave me room to trail out early without getting greedy.
I set the trail to a candle stop at the M5 TP level and exited at 8R — 8% on 1% risk. One of the better trades. I’d normally aim for at least 3R, which keeps me in profit at the win rate I trade at (above 35%).
I’ve been trading this strategy for two years and still learning something every day. As with all trading, the most important qualities are discipline and patience — with those, the results follow.