Does the London breakout strategy work on GBP/USD?

Key results

Total return

-60%

Buy & hold: +2.1%

Annual return (CAGR)

-8.8%

Buy & hold: +0.2%

Max drawdown

-60.4%

Buy & hold: -27.6%

Win rate

33.68%

Profit factor

0.72

Trades

2,432

Longest losing streak

15 trades

Period

Oct 2, 2016 to Oct 1, 2026

10 years

Market

GBP/USD

15-minute

Equity curve vs buy & hold

Returns year by year

Calendar years, compounded from monthly results. The first and last years can be partial.

The London breakout is a favourite setup of GBP/USD day traders. The pound is quiet during the Asian session and tends to move hard once London opens, so the plan is simple: mark the Asian range, wait for London, and trade the side that breaks first. The idea is widely documented, for example by Quantified Strategies. This version is the tight intraday one: 15-minute candles, a short entry window, and a small fixed stop.

The rules we tested

• Market and period: GBP/USD, 15-minute candles, October 2016 to October 2026.
• Asian range: the high and low of the previous Asian session, from 00:00 to 06:00 UTC.
• Long entry: the close crosses above the Asian session high, between 07:00 and 11:00 UTC.
• Short entry: the close crosses below the Asian session low, in the same window.
• Stop and target: a fixed 20-pip stop-loss and a 40-pip take-profit (2:1). No separate exit rule.
• Sizing and costs: 100% of equity per trade, 0.02% commission per side, $10,000 starting capital.

What the backtest shows

The signal on its own is close to neutral. Of the 2,432 trades, 1,552 hit the stop, 807 hit the target and 73 closed on a signal. That is a 33.7% win rate, just above the 33.3% that a 2:1 bracket needs before costs.

Costs are what turn neutral into a steady loss. A 20-pip stop is small: at typical GBP/USD prices, a round-trip commission of about 0.04% of the position is roughly a quarter of it. After costs, the average win was 0.27% and the average loss 0.19%, so the strategy needed about 41% winners to break even, not 33.3%. The yearly table makes the point better than any formula: 2018 was the only year that came close, with 110 winners out of 261 trades, and it still lost 0.16%.

The result is -60.0% over ten years, a profit factor of 0.72, a longest losing streak of 15 trades and a worst drawdown of 60.4%, against +2.1% and a 27.7% drawdown for simply holding the pair. Every calendar year in the sample was negative, and every full year from 2019 to 2025 lost between 7.3% and 12.0%. The worst was 2025 (-12.03%, 58 winners out of 206 trades).

The hourly version on EUR/USD, with a 35-pip stop and a 70-pip target inside the London open kill zone, lost 28.0%: less, which fits the idea that a wider stop leaves more room for costs.

Why it doesn't work here

The open of London does bring a burst of volatility in the pound, but direction is the hard part. A break of the Asian high or low is the most watched level of the morning, and the first push through it often runs out before it covers twice the stop. On 15-minute candles with a 20-pip stop, ordinary noise is enough to hit the stop, and the strategy trades about 240 times a year, paying commission each time.

What you could test next

• Widen the bracket (for example 40 pips stop, 80 pips target) so costs weigh less per trade.
• Run it on 1-hour candles to see whether a slower confirmation filters out false breaks.
• Shorten the window to the first London hour only.
• Add a filter on the Asian range width and skip days when the range is already unusually wide.

Methodology and assumptions

Frequently asked questions

Reproduce it, then change it

Every number on this page comes from the Backtrex engine. Rebuild the strategy in the app, then change the market, the timeframe or a parameter and see whether the result holds.

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