Opening Range Breakout Strategy for Beginner
The opening range breakout (ORB) is a well-established trading strategy for stock day traders.
This post details observations while trading the ORB on
short-term time frames such as 1-minute,
5-minute, and 15-minute price charts.
The Opening Range
There are various definitions of what the opening range means, but the most common is that it refers to the gap between the low and high price of the first 30 minutes of trading.
Three Approaches to Trading the Opening Range Breakout
How should the trade be managed? There are three things the trader can do.
Fixed Risk, Fixed Target
Use the height of the reference candle to calculate the number of shares traded. The use of a fixed risk and fixed target simplifies trade management.
Fixed Target, Trailing Risk
The process works well with high-momentum stocks that see fast price changes, and in some circumstances, the price continues to trend up throughout the trading day.
Fixed Risk, No Target
While you can’t predict how much profit you might make with this tactic, you know that if you’re stopped, how much you’ll lose.
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