As I promised you many many many days ago, here I write the trading system base of my free forex signals. Before we go further, please remember that every system has its own strengths and weaknesses. I always suggest not to overlook anything including at any trading systems. Also please note that the system is designed spesifically for trading GBP/USD.

The Basic
In general, the system is based on many basic trading concept: Pivot Lines, The London Breakout concept and support and resistance. The big ben strategy explains very well how The London Breakout concept could be very useful for trading the GBP/USD. Of course I have additionally put my own approach.

For a simple start, I believe that many of you – especially who have been following my free forex signals since the beginning- have recognized these simple formula:

1. Define the daily pivot
2. Place buy order at 20 or 40 pips above the pivot, or
3. Place sell order at 20 or 40 pips above the pivot
4. start to place the order at about 05.00 GMT

Ok, you have noticed that, right? Where were those “20″ and “40″ number derived from? From the common sense of GBP/USD habits. I don’t know who were the first one noticing those (absolutely not me, of course), but those have been used by many traders who trade daily pivot for quite long time. I noticed that those reference number were pretty reliable, so I decided to use them.

I have already had a separate article about the order placing time, so I don’t think it is necessary to explain it again here. For additional info, I use GMT time format in order to simplify you making an adjustment with your local time zone. Don’t confuse your self with this time zone matter, go to http://wwp.greenwichmeantime.com/ you will find there (right on the homepage/frontpage) two digital clock showing your local time zone and the time in GMT. Just make sure your computer have a proper time setup.

Defining “One Day” in Forex Market
Before we able to define the daily pivot we need to firstly define the “One Day”. What is one day? When speaking about “a day” or “one day”, most of us has been trapped into the common way people define it which is by “a date”. So, “one day” is “one different date”. This is of course not the wrong way to define “one day”, not it is not, especially if you are not in forex market. If you are in forex market, this kind of definition will bring you headache. Do you need a proof? Try to do this:

Find and use a forex broker whose time zone is different with your local time zone. Then go find other trader whose local time zone is different with your and he/she use a broker whose time zone is different with his/her local time zone and also different with your local time zone and your broker time zone. Try to have a chat with him/her about your recent trade or recent market condition or try to compare your market technical analysis with him/her.

Hope you will get what that “headache” means. I talked to several traders from different part of the world, everytime I found them confuse with those matter (one day, date, time zone etc).

Have you ever think this “which one come first, ‘day’ or ‘a date’?” ? We all know “day” come first and “a date” or “calendar” come about million years after. Since the first day of the world, sun rise from the east, shinking on the west and rise again from east. This is what substantially called as “one day” and this process needs 24 hours.

So, for practical purpose in forex markets, it is better to define “one day” as “24 hours” instead of “one different date”. So, you can say “one day” as range of time between ” 00.00 GMT till 24.00 GMT, or between 23.00 GMT till the next 23.00 GMT, or even 07.00 GMT till the next 07.00 GMT.

Why do I talk about this? To help you understand the rest explanation about this Pipholic Daily Pivot Trading Systems.

One Day in Pipholic Daily Pivot Trading Systems
Again, this definition is for practical purpose. This is my “one day” definition for GBP/USD pair. The largest volume of GBP/USD trade is during the Europe session. The second most largest volume is during the US session.

Europe session is opened around 06.00 GMT and closed around 17.00 GMT. The US session is opened around 13.00 GMT and is closed around 22.00 GMT. You see that the US session is closed later. Since we are trading USD, we should consider that in US session there are significant volume of USD trade. The volume could be significantly influence the GBP/USD market price.

Based on the latter assumption and my own experience, I define one day for GBP/USD as a range of time between 20.00 GMT and the next 20.00 GMT. As of my observation, around 21.00 GBP/USD price is relatively stable. So, I took this time as the “End of day” for GBP/USD.

For the rest explanation, please read the Pipholic Daily Pivot Trading System.

Tags: Big Ben strategy, daily pivot, free forex signals, gbp-usd, trading systems
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March 24, 2008

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