Opening Range Breakout discussion

[Abiel 475]

Let´s use this thread to discuss Opening Range Breakout Strategy (ORB), a strategy with the potential to make us very happy or very miserable right at the open of the market. Let´s discuss success cases, failed ORBs and how to improve the chances to take a successful ORB in order to finish happy and early our trading days.

Opening Range Breakout Strategy according to Andrew first book: "How to Day Trade for a Living: Tools, Tactics, Money Management, Discipline and Trading Psychology":

 1.    Monitor the stocks in watchlist for the first five minutes. identify opening range and price action. Look for a directional upward or downward movement in the one minute chart. Look for high volume with many orders going through.  
2.    The opening range must be significantly smaller than the stock’s Average True Range (ATR). See how to add ATR to daily chart in DAS Trader Pro.  
3.    See if the stock is breaking the opening range, enter the trade according to the direction of the breakout: long for an upward breakout and short for a downward move. 
4.    Stop loss is a close below VWAP for the long positions and a break above VWAP for the short positions. 
5.    Profit target is the next important technical level, such as: levels you identified in the pre-market, moving averages on a daily chart, and/ or previous day close. 
6.    If there is no clear technical level for profit target, exit when the stock shows signs of weakness (if long) or strength (if short). For example, if the price makes a new 5-minute low, that means weakness and consider selling your position if you´re long. If I you´re short and the stock makes a new 5-minute high, then it could be a sign of strength so consider covering your short position. 

For examples of ORBs, please post 1 & 5 minute (or longer time frame in case of 10, 15, or 30 min ORBs), with your entries and exits, pointing why it was a successfull or unsuccessfull ORB.

[Abiel 475]

GPS May 28 2018 - Successfull ORB

GPS was in @Brian Pez watchlist so I keept in mine too. I added hig and low of pre-market with blue lines and very soon at the open GPS lose both levels. 

And alert for me was that in minute 3 it couldn´t make a new low and in min 4 it pulled back, and by min 5 it showd a bearish candlestick so I took it short (sim) as soon I saw the 6th min candle breaking the 5 min range. My Target was that $28.19 level & my stop loss was a little above VWAP. This was my only trade for the day, 

A remark from @Robert H in the chatroom:

5/25/2018, 8:56 AM [Robert H]: $GPS so stress free. We're all trading garbage lol

[Abiel 475]

MU Jul 5 - Unsuccessful ORB

The previous trading day, Jul 3, MU dropped like a champ because news from China, so some of us were holding a short bias on MU.

So the first 3 mins MU dropped nicely, with a pullback in min 4 and min 5 made a higher-low and MU didn´t sell off as some of us were expecting,  but it went higer and broke range to the long side only to drop again. Pure garbage choppiness.

The lesson here may be is that we need to be extra careful with pullbacks in one min and may be wait 2 more mins after the 1st five min candlestick.

 

 

 

[Abiel 475]

CTIC Jul 09 2018 - Successfull ORB (sim)

CTIC was being traded with high volume so I keept it in my watchlist. CTIC is a stock with a moderate ATR so I didn´t expect too much volatility. Righ at my entry @ 9:31.18 an ugly wick formed but soon the price moved higher. I put my stop loss around those 9/20 MAs @ 4.39I and covered near HOD for a 2:1 risk:reward ratio. 

[MichelleJ 1]

Being killed by trying to catch ORB for 3 consecutive days.😭😭😭 Looking for cure here. Thanks for sharing.

[Abiel 475]

44 minutes ago, MichelleJ said:

Being killed by trying to catch ORB for 3 consecutive days.😭😭😭 Looking for cure here. Thanks for sharing.

@MichelleJ In this video Brian show how to scan for ORBu & ORBd... If you like, share your screenshoots for analysis of your ORBs...

 

[Abiel 475]

JNC today, ORBu

 

 

[Abiel 475]

TWTR clean  ORB down in 5 min chart. In 1 min chart price lose VWAP to reverse above VWAP and finding resistance in that $45.19 level then losing VWAP and fall like a boss...

 

 

 

[serioustrader 1]

On 7/8/2018 at 1:18 PM, Abiel said:

MU Jul 5 - Unsuccessful ORB

The previous trading day, Jul 3, MU dropped like a champ because news from China, so some of us were holding a short bias on MU.

So the first 3 mins MU dropped nicely, with a pullback in min 4 and min 5 made a higher-low and MU didn´t sell off as some of us were expecting,  but it went higer and broke range to the long side only to drop again. Pure garbage choppiness.

The lesson here may be is that we need to be extra careful with pullbacks in one min and may be wait 2 more mins after the 1st five min candlestick.

 

 

 

Was this an unsuccessful ORB because the first 5 min candle was relatively large, possibly bigger than ATR? 

[Tim 0]

As shown below, MU ran up $3.50 in the pre-market and I think the red candles were nothing more than profit taking. The first 5 minute candle was well inside MU's ATR of approx $2.39 and the second 5 minute white candle was an indication of continued buying interest. For me, I think 5 minute ORBs are too risky. If they go your way, they can be quite profitable but if not, they can be quite expensive too and my account can't take big hits. Maybe I just don't have the experience yet to read them but I prefer to wait 15 minutes.

[Robert H 455]

3 hours ago, Tim said:

As shown below, MU ran up $3.50 in the pre-market and I think the red candles were nothing more than profit taking. The first 5 minute candle was well inside MU's ATR of approx $2.39 and the second 5 minute white candle was an indication of continued buying interest. For me, I think 5 minute ORBs are too risky. If they go your way, they can be quite profitable but if not, they can be quite expensive too and my account can't take big hits. Maybe I just don't have the experience yet to read them but I prefer to wait 15 minutes.

ORB's are indeed risky. The key is setting a manageable stop loss--preferably VWAP--and having the reaction time to get out when it fails to crack/pop below/above the opening body. When they do work out, your day can be one-and-done.

I was caught in the July 5th MU squeeze/chop and ended the day with some big losses. I recall WBA and VRX squeezing us on some failed ORBD's in the past few weeks as well. That being said, it is still my favourite strategy. Potentially big losers offset by massive winners.

[serioustrader 1]

I’m not sure if 15 min candles make ORB’s any less risky. I think ORB’s with technical formation e.g. ABCD or bull flag are much less riskier - regardless of timeframe (1min, 5min, 15min etc.). Just my 2 cents!

[Tim 0]

5 minutes ago, serioustrader said:

I’m not sure if 15 min candles make ORB’s any less risky. I think ORB’s with technical formation e.g. ABCD or bull flag are much less riskier - regardless of timeframe (1min, 5min, 15min etc.). Just my 2 cents!

I agree with you. By saying I prefer to wait 15 minutes, I didn’t mean I was looking for 15 min ORBs. Just that after 15 minutes, some 5 min ORBs will have consolidated into ABCD or Bull Flag patterns. I also agree with Robert H. If you can catch an ORB going your way, the return can be excellent if you can hang with it long enough. Right now, I have a hard time doing that but it’s something I’m working on it. Rather than bail too early, I’m working on scaling out and leaving a small piece to run. I’ve watched Andrew do that on a regular basis. However, his small piece is generally larger than my entire position 🙂.

[David L 1]

Thanks for starting this thread.  Look forward to learning more.

[Abiel 475]

Today Andrew traded two ORBs: $AMAT & $CBIO

 

$AMAT pulled back to VWAP and I didn´t hold it 😞