Opening Range Breakout
BeginnerIntraday (5-30 min charts)Day Trading
Strategy Overview
Trading breakouts from the first 15-30 minutes trading range.
How It Works
The Opening Range Breakout (ORB) strategy identifies the high and low of the first 15-30 minutes of trading, then trades breakouts from this range. This period often sets the tone for the day as it incorporates overnight sentiment and initial institutional positioning. The strategy works because many traders watch these levels, creating self-fulfilling breakouts. ORB can be adapted for different timeframes and markets, making it versatile for various trading styles.
Setup Rules
- 1Mark the high and low of first 15-30 minutes
- 2Ensure adequate range (not too narrow)
- 3Volume should be above average
- 4Check for news or catalysts
- 5Identify the prevailing market trend
Entry Rules
- Enter long on break above opening range high
- Enter short on break below opening range low
- Wait for candle close above/below range
- Confirm with volume surge on breakout
Exit Rules
- Initial target at 1.5x the opening range
- Secondary target at 2x the opening range
- Trail stop using 20 EMA after first target
- Exit if price re-enters the opening range
Risk Management
- Stop loss at opposite side of opening range
- Or use half the range as stop distance
- Size position based on range width
- Maximum 2% account risk per trade
Advantages & Disadvantages
Advantages
- • Simple and clear rules
- • Works in trending markets
- • Defined risk and reward
- • Can be automated easily
Disadvantages
- • False breakouts common in choppy markets
- • Requires discipline to wait for setup
- • Less effective on low volume days
- • Stop losses can be wide on volatile days
Best Market Conditions
Trending days with clear directional bias