What is the big ben trade strategy?
One of my favorite currency pairs to trade is the British Pound against the US Dollar (GBP/USD). It is super technical with a lot volatility (which means if you understand technical underpinnings, you can profit from the volatility). As a result, the exchange trends exhibit behaviors that provide clear trades – especially in the short term (We’re talking 5 minute time frame to expiration)
The perfect time to execute a Big Ben trade is in the morning in the United States, when the markets are sleeping, or if you are across the pond in Great Britain, in the morning when the markets are just about to open. Essentially For British traders were are talking 7am-9am GMT. For US traders were talking 2am-4am Eastern Standard Time – shake off that hangover, you can do it.
It is important that you wake you up before the market starts a new and exciting day. You’ll need this time to recognize the setup for the Big Ben trade, mark the trendline, and prepare the appropriate signal to initiate your attack depending if you are working with a resistance line or a support line..
Keep in mind that the Big Ben strategy only works with the GBP/USD trading pair. The trading hours are limited for this particular pair to just before the European Markets open – 7am-9am.
How to trade with The Big Ben strategy?
When I feel like pursuing the big ben strategy, the first thing I like to do is open a naked chart. A naked chart is simply a chart of the price of the asset (in this case the GBD/USD pair) without any indicators. The reason why I like to start with the naked chart is that I find it is the best way to “feel” the market trends. It is devoid of all distractions.
Once you have the naked chart sitting in front of you, you need to mark the trend and wait for the right breaking point. Marking the trend is a fairly simple, straightforward process never-the-less it is extremely important. Discerning the right trend is foundation upon which you will initiate the trade. If the trend is off it throws the entire trade into question. When looking at the naked chart, all you need to do is create a line based on the end of the candle. (Each blue, green or red bar marking in the below chart is a candle.) It is best if the line is based off more candle points, but three should be sufficient. Below you’ll see some examples. The moment the trend hits your breaking point – i.e. when the a candle crosses the support or resistance line – it is time to attack. Below you’ll find a few naked charts with a step by step breakdown of the process.
The Big Ben strategy has an amazing success rate for short term trades. You can also find success over longer trends, but you need to make sure the setup is clear to you.
Below are some step by step examples of the process we discuss in the above paragraph:
A CALL or PUT setup for a Big Ben trade
In the above example, you see two parallel lines drawn on an otherwise naked chart. You can see that each line touches three different candle points. In general, the line above the candles is called a resistance line as it “resists” upward trends. The line underneath the candles is call a support line as it “supports” against downward trends.
This example demonstrates that this asset price can initially be set up for either a CALL or PUT setup. If you notice the trend breaks above the upper “resistance line”, it is a CALL setup. If the price trend breaks the lower “support line”, it is a PUT setup. In this specific example the price trend of the asset represents a PUT setup. Meaning in this scenario it would be best to buy a PUT option. (See red arrow for downward breaking point).
A PUT setup for Big Ben trade
This scenario is similar to the previous example, however, here we only have a support line. Just as before, the support line is drawn based on at least three candle points. The key is to wait for the right setup – the moment the price trend breaks the support trendline. (See red arrow for moment price trend breaks through the support line). If you move too early or late the chance to capitalize on this perfect setup will be lost and you’ll have to wait until the time is right to use the Big Ben strategy again.
A CALL Setup for Big Ben trade
We’ve already discussed a PUT setup and a PUT and CALL setup. In this final example we discuss the remaining potential example. The above graph displays a pure CALL setup. As always when making a Big Ben trade, you need to mark the trendline against at least three candles. In this case, the resistance line is above the price trend. The right moment will come when the price trend breaks above the resistance line. (See red arrow for moment when price trend breaks the resistance line.)
Trading Summary for the Big Ben Strategy:
Asset: GBP/USD currency pair
Time Frame: 5 min chart
Trading hours: 7:00am – 9:00am (GMT); 2:00am-4:00am (EST)
1) Mark the trend line
2) Prepare for a breaking point
3)Once you’ve identified the breaking point purchase a Call or Put option accordingly.
The first thing I do every morning, after coffee, is try to make a big ben trade. Overtime I’ve learned to know which setups to leverage into a large trade as well as which setups to avoid. I’ve had some greatly profitable mornings with this simple and easy to use strategy.
Remember: If there is no clear setup do not trade – wait for the next morning, there will be always new opportunities to use the Big Ben strategy.