Exactly How Opening Range Breakout Strategy Could Make You Rich

Published: 03rd April 2011
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The Opening Range Breakout is just about the easiest day trading set-ups to learn. The first hour of the trading day is the most volatile. Bears and bulls are fighting it out in the stock market, attempting to show you who's going to be the superior group throughout the day. Like all breakout trading set-ups, it's a terrific set-up because it offers a very low risk entry. If there's no follow-through on the opening range breakout, you must exit the trade promptly.

The Time-Frame

You are looking for opening range breakouts to occur between 9:50 am and 11:00 am. This provides a stock lots of time to build the range while supplying you with enough information to figure out which direction it will breakout.

Components for Breakout Success

You'll find four elements that need to be taken into consideration in order for the opening range breakout trade to be likely and profitable.

1. If playing the long side, is the Dow, S&P 500, and Nasdaq all in strong uptrends? They must be. Don't try swim against the current.
2. The price has got to show a prejudice towards one side or the other. The uptrend implies a substantial bias towards the high and increases the chance of a follow-through when the high is broken.
3. The high or low has to be tested. Without this test, this level has not proven to be resistance or support so a follow-through is not as likely to happen.
Volume has to be high. Something to make note of with any breakout trading play would be that the volume should increase on the breakout. The trades on the tape must be increasing in size and quantity as the level is broken. This ensures that the trade possesses the momentum to carry on to your targets without falling back to the opening range.

These 4 elements will make sure that you will get the most probability of a follow-through on the Opening Range Breakout.

Exit Tactic

To exit, I prefer to set a hard target of say 2% or higher and then get out. Bulls make money, bears make money, but pigs get slaughtered. You needn't be a pig. You want to keep your profit goal small and once you hit it, take your profit and run.

Watch out for the price as it draws near to whole numbers. A lot of investors take profits at these crucial psychological levels. These sort of whole numbers are $10, $11, $12,and so forth.

Opening Range Breakout the Gap Reversal Strategy

Now I want to focus on a variant of the Opening Range Breakout. It's name is the Opening Gap Reversal. It is really yet another of the many beneficial setups for daytrading online that you can add to your arsenal.

The Game

Stock charts will frequently gap open. If the chart gaps between market open and 11:00 am, here's how you play it.

We simply desire to make money from the traders that do think that it is a fact. Should you wish to play it just a little safer without shorting, you may hold back until the gap fills then go long.

If it was a gap down open or perhaps the chart gaps down in the first hour of trading, you may fade (go long) the gap in anticipation of the gap filling. An alternate way to play it is to let the gap fill and then as soon as it does, go short the stock.

I don't know how true that is, but I know a lot of people feel that it's true.

The idea of the Opening Gap Reversal is that many individuals who had anticipated closing the gap are getting out of that trade. Trading Trolls
The Way Opening Range Breakout Will Make You Way Too Rich
Precisely How Opening Range Breakout Strategy Can Make You Wealthy

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