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Inception Strategy

Monday, 22 January 2018 12:46
Inception Strategy

Inception Strategy is very similar to the Forex system “London bombings.” It implies trading using pending orders at the beginning of the London session.  It is noteworthy that this method is used only for the EUR/USD and AUD/USD pairs.

Since speculators most actively work when the British markets are opened, it provides a huge impetus for the blast of volatility in the most popular pairs. Therefore, the strategy involves tracking the volumes of currency sales at the start of the trading day and placement of pending orders, based on the data received.  

Logic of the Inception Strategy

During the first 30 minutes, traders are selling large amounts of currency. Due to a strong surge in activity, the price chart may not respond to changes in time and display false movements.  But exactly at this moment, the levels of intraday trading appear.

Working on the Inception system, it should be remembered that already established High and Low levels are hard to break through. However, if this happens, then the trend will continue to keep momentum for a long time.

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Features of the Strategy

The trading method does not involve the use of indicators, which makes it very handy for the beginning traders. Also, a manual closing of orders allows exiting the market with a desired profit in time. 

If you still want to control trade with the help of technical indicators, use a classic Moving Average tool.

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Please, note that an hour before the release of the important economic news it is better to close positions and wait for an hour after that. Such events often cause a gap, and in the case of pending orders, it is very important.

Trade Rules

As soon as local maximums and minimums are formed, in 5 pips from each of them set pending orders – a Sell Stop and a Buy Stop. 

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The Stop Loss levels should correspond to the prices of the opposite transactions. For example, if you placed a Buy position at the level of opening the sell-stop order, then for the sell stop you should set a Stop Loss at the level of opening the buy-stop.  

It is better to close transactions manually, not placing fixed Take Profits. Do that approximately in 2,5 hours after the trade in London starts. At this time major players usually take a lunch break.

Recommendations on Inception Strategy

Before starting analyzing the market, check the time difference with Greenwich. It can significantly affect the trade results.

Remember that large volumes of currency sales are caused by the European news. If to keep track of the announcements in time, and place pending orders on this basis, you will definitely be in the black with minimum losses. But in any case, you cannot avoid loss-making deals, so do not be upset if this option with the news did not work. Practice shows that Inception Strategy has a 65% profit.

If you wish, you may use a manual Trailing Stop. That will prevent you from the emergent closing of positions. Additionally, you can use the channels of the linear regression; they warn you when the trend reverses. Also, to be confident, you can use, as we mentioned before, moving averages. When they are crossed on the candle’s shadow, you can close orders.

However, the strategy has its minuses.

  • Firstly, it cannot be used during a flat. As is known, a trend price movement takes 30% of all trading time. That is, there is not so much time for active trading.
  • Secondly, the system can be accepted only with two pairs. It limits the capacity for actions in the Forex market.

Before using the method in a real market, we recommend testing it on a demo account.

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David Melton
David Melton

Financial expert. I work with investors and different companies. I write analytical reviews for newspapers and TV channels and I also manage researching projects

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