Trading the Opening Range Breakouts: A Beginner’s Guide

Welcome to this beginner’s guide on trading the opening range breakouts. In this guide, we will delve deep into this popular day trading technique, its benefits, and how to effectively employ this strategy for significant returns.

Understanding the Opening Range Breakout

The opening range breakout (ORB) is a commonly used trading strategy that involves identifying and trading breakouts from the opening range of a trading day. It is considered one of the most powerful and consistently profitable trading methods when executed correctly.

Why Trade the Opening Range Breakout?

• Predictability: The ORB strategy is based on the premise that the first movements after the market opens are indicative of the day’s overall trend.
• Profitability: It can be highly profitable due to the high volatility during the opening range.
• Simplicity: It is relatively easy to understand and implement, making it suitable for beginners.

How to Trade the Opening Range Breakout

1. Identify the Opening Range: This is the range within which the price moves during the first hour of trading. It’s determined by the highest and lowest price during this period.
2. Wait for a Breakout: A breakout occurs when the price moves above the highest point or below the lowest point of the opening range.
3. Enter the Trade: As soon as a breakout is identified, enter the trade in the direction of the breakout.
4. Set a Stop-Loss: Always set a stop-loss order to limit potential losses if the market moves against your position.
5. Take Profit: Decide on a suitable profit target and exit the trade once this level is reached.

Final Thoughts

Trading the opening range breakouts can be a profitable day trading strategy when applied correctly. As with all trading strategies, it’s crucial to practice on a demo account before risking real capital. Remember, patience and discipline are key to successful trading.