D ay trading the foreign currency (forex, FX or
interbank) market is definitely one of the more
challenging endeavors an aspiring trader can
pursue. The higher degree of leverage (as high as
50:1 or 100:1) available in this market can increase profits, but
it equally accelerates losses.
This makes the issue of trade timing
and selection that much more critical to
success. Because of the lack of volume
data in the spot currency market (i.e., there
are no Level I or II quotes, or time and
sales data), newer traders will find they
will need to develop much more disci-
plined strategies that rely less on broader
market dynamics and more on raw price
action and individual market “micro
The “Big Ben” strategy exemplifies this
approach. It is a day-trading technique
that takes advantage of the shift from trad-
ing from one market center to another in
the 24-hour forex trading environment.
For more background information on
currency trading, see “The forex market”
on the opposite page.
The Big Ben stra t e g y
Big Ben is a currency-specific trading strat-
egy designed to capture the first direction-
al intraday move that often occurs within
Frankfurt/London market openings,
which begin at approximately 1 a.m. ET.
The strategy works best with the British
pound/U.S. dollar (GBP/USD) rate.
Because this currency rate trades lightly outside of London
trading hours, the surge in trading every morning in the U.K.
gives it a “real” market opening, which the strategy looks to
exploit. Figure 1 shows pound/dollar trading is virtually non-
existent during Asian trading hours. When London opens,
however, the pound/dollar accounts for nearly one-quarter of
September 2004 • CURRENCY TRADER
D AY TRADING THE FX MARKET :
A d i ff e rent approach to the pound
Opening-range breakout techniques have long been favorites of
intraday stock index traders. A similar technique can be used in the
currency market to capitalize on price moves in the British pound.
BY KRISTIAN KE