Trading the opening range breakout in intra-day trading

Trading the opening range breakout in intra-day trading

"Investing is a marathon, not a sprint." - John Paulson

Intra-day trading can be a challenging endeavor, but one strategy that many traders use is trading the opening range breakout. This strategy involves identifying the high and low of the first few minutes of trading and then entering a trade when the price moves above or below that range.

The opening range is typically the first 30 minutes of trading, although some traders may use a shorter or longer time frame depending on their preferences. During this time, there is often increased volatility and momentum as traders react to news and other market events.

To trade the opening range breakout, a trader first needs to identify the high and low of the opening range. This can be done manually by watching the price action or by using an automated tool such as a trading indicator. Once the range has been established, the trader can place a buy order above the high of the range or a sell order below the low of the range.

It's important to note that not all opening range breakouts will be successful trades. Traders need to be able to quickly cut their losses if the price moves against them. Some traders may also use a stop-loss order to automatically exit the trade if the price reaches a certain level.

One way to increase the probability of a successful trade is to look for other signals that support the opening range breakout. For example, if there is a significant news event or a bullish technical pattern forming, this may increase the likelihood that the price will break out of the opening range to the upside.

In conclusion, trading the opening range breakout can be a useful strategy for intra-day traders looking to capitalize on early momentum in the market. However, traders should be aware of the risks involved and be prepared to quickly exit the trade if the price moves against them. By combining this strategy with other technical and fundamental analysis, traders can increase their chances of success.