Opening Range Breakout Technique for Newbies

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. 

After the opening bell, stock trading usually sees some of the most significant price swings of the day. It's not unusual for the first 30 minutes of trading set the tone for the rest of the session, determining whether it will be volatile with high volume or sedate with low volume.

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. During this time, the range might expand, but that's ok; what matters is what the highest and lowest prices are at the 30-minute mark. 

Any basic stock charting package can do this work for you through candlesticks. There are four key price points in a candlestick; the chosen period's open, high, low, and close.

Example:'s imagine your reference candle is a green up-candle. The wick is the thin line that appears above and below the candle's body and highlights the highest and lowest price points. The body marks the opening and closing price.

If you're trading the opening range breakout the traditional way, you'll buy the stock if the price rises above $121 and sell the stock if the stock price falls below $109.

Trading a specific number of shares or a fixed dollar amount makes little sense when trading the opening range breakout. Instead, you must alter the position size to match the range of your reference candle. 

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