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Opening Range Breakout Trading
Opening Range Breakout Trading
Here's one of the best and simple intraday strategy you can try.
Opening Range Breakout (ORB) is a commonly used trading system by professional and
amateur traders alike and has the potential to deliver high accuracy if done with optimal
usage of indicators, strict rules and good assessment of overall market mood. This system is
applicable only for intraday trading.
ORB trading has several variations practiced by traders all over the globe. Some traders
trade on a significant breakout from opening range, while others trade immediately on
opening range breakout. Time window for the trades also varies from 30 minutes to 3 hours.
Over a period of time observing and trading Indian markets, I have devised with the below
system suiting our markets. Below method is both a scalping and a trending system
combined into one, hence it is possible to take the advantage of quick moves and trending
markets with multiple lots of trades.
Trading Strategy
Quite Simple and straightforward. Rules in the next section needs to be adhered to increase
the success rates dramatically.
Any stock creates a range in the first 30 minutes of trading in a day. This is calling Opening
Range. The highs and lows of this timeframe is taken as support and resistance.
1. Buy when the stock moves above the Opening Range high.
2. Sell when the stock moves below the Opening Range low.
PLEASE NOTE THAT THE ABOVE SYSTEM IS GENERIC, THE RULES BELOW WILL
MAKE IT A SPECIFIC SYSTEM. IF YOU ARE FOLLOWING THIS SYSTEM, PLEASE
FOLLOW ALL THE RULES FOR BUY / SELL STRICTLY.
Opening range is defined by the high and low made in the first 30 minutes.
5 min chart with 5 EMA and 20 EMA used for making trading decisions.
Entry should be made only on close of the 5 min candle outside the opening range.
20 EMA is one of the key technical indicators used in this system for trend trading. Stop loss
is always kept at 20 EMA for riding the profits.
Optional confirmation- One of the two indicators - MACD or Stochastics should be favorable
for the trade. (We have four indicators in Simplified Technical Analysis - Moving Averages,
RSI, MACD, Stochastics. The idea here is at least two indicators should confirm the trade.).
Respect support and resistance levels. Do not buy just below a resistance or sell just
above a support.
Always trade with 2 lots and book 50% as soon as you see few points profit. Second lot
will be used for taking advantage of days trend.
Stock should be trading above the 20 EMA line before the breakout.
Buy when the 5 minutes candle closes above the opening range.
5 EMA line should be above the opening range at the time of breakout.
When the 5 min candle closes below the 20 EMA in the case of longs.
Stock should be trading below the 20 EMA line before the breakdown.
Sell when the 5 minute candle closes below the opening range.
5 EMA line should be below the opening range at the time of breakout
The Opening Range breakout is above previous day’s high for buy.
The Opening Range breakout is below previous day’s low for sell.
Trade is in the direction of higher time frame charts (15 min /30 min).
Overall Market is moving in the direction of the trade.
Opening range breakout happens after brief period of consolidation.
If the opening range is too wide, better do not trade ORB, since the SLs will be very far
in our system. You can use other trading systems in such a case.
Avoid Opening Range Breakout trades in case of a heavy news flow day. ( Like
Inflation, Manufacturing, Policy decisions etc.). Use other trading systems once the
market settles down after the news.