The London breakout strategy, explained simply

By the CandleGPT team · Updated November 4, 2026 · 3 min read

The London breakout is a classic strategy: mark the range price makes overnight, then wait for it to break out when London opens. Here are its exact rules, its weak points and how to work out the right size.

The idea: the night is quiet, London wakes the market up

Between midnight and 07:00 UTC, most large European and American players are not at work yet. On pairs such as EURUSD, GBPUSD or on gold, price often moves in a narrow zone: the overnight range.

When London opens, volume jumps. Price often leaves that range, and the strategy is simple: follow the first breakout, on the basis that the arrival of large volume can extend the move. It is not a certainty: it is a rule applied the same way every time, with results you can measure.

The exact rules

Why a close rather than a simple touch? Because a wick that pokes out of the range and comes back is a very common false breakout. Waiting for the candle to close filters some of these traps, at the cost of a slightly worse entry.

A worked example

On gold, price moves between 2640.00 and 2650.00 overnight. At 07:15 UTC, a 15-minute candle closes at 2651.50.

• Entry: 2651.50 (buy).
• Stop: middle of the range, 2645.00. Distance: 6.50 dollars.
• Target: 2651.50 + 1.5 × 6.50 = 2661.25.

With a $5,000 account and 1% risk ($50), you need a size where a 6.50-dollar move costs $50. On gold, one standard lot is usually worth $100 per dollar of movement, so $650 here: the size is about 0.07 lot. Always check the tick value at your broker, as contracts differ (see our position size guide).

Traps to know about

False breakouts

Price leaves the range, triggers the entry, then comes back inside and hits the stop. It is the most common way the strategy loses. It is part of the game: no rule avoids them all.

A range that is too wide or too narrow

After a busy night (an Asian release, a heavy weekend), the range can be very wide: the stop at the middle gets large and the size must shrink. A tiny range, on the other hand, gives a very tight stop that normal price noise can hit.

Morning releases

European figures often come out between 07:00 and 10:00 UTC (German inflation, PMIs, UK jobs). A breakout just before a release can be wiped out in seconds. Check the calendar first, or read our guide to trading news days.

Daylight saving time

The rules are written in UTC. Your broker often shows its server time (GMT+2 or GMT+3), and clocks change twice a year. One hour off is enough to get the range wrong.

Which markets?

The strategy is mostly used on markets that are very active at the European open: GBPUSD, EURUSD, gold (XAUUSD) and the DAX (GER40). On illiquid pairs or during holidays, breakouts are less clean.

What to expect from the results

With a target at 1.5 times the risk, the strategy does not need to win more than half the time to offset its losses: in theory about 40% winners is enough, before costs and spread. But results vary a lot between markets and periods, and a run of 5 or 6 losses in a row is normal. That is why position size matters more than the strategy itself: at 1% risk, six losses in a row cost about 6% of the account; at 10%, they cut it nearly in half.

Trading involves a high risk of losing money. This guide is educational: it is not investment advice and does not tell you what to buy or sell. Past results do not predict future results.