| One of the most common and popular intraday trading | | | | economic reports and Asia and European market |
| concepts is the Opening Range Breakout (ORB) trade. | | | | developments. The only way you can tell if the new |
| Since its conception, ORB has evolved into a number | | | | buying and selling information is impacting traders’ |
| of different varieties which are often reviewed in the | | | | value assessments is if you break out of that range. |
| Trading EveryDay Live Trading Room with entries, set | | | | 2. A true breakout move should impact all the major |
| ups, and stops. | | | | market averages and sectors (including, but not limited |
| Ever since the market decline of 2000-2003, the | | | | to, Dow Jones, Standard & Poor’s, Russell 2000, |
| trading environment has become one of low volatility | | | | etc.) the same way. |
| resulting in the propensity for short-term price | | | | 3. A valid breakout should also provide us with |
| movements to reverse. In turn, this environment has | | | | increased participation as there are lower or higher |
| created chaos with Opening Range Breakout trading. | | | | prices. When this happens, you can be fairly certain |
| Let’s take a look at what this means. | | | | that that the “big boys” are “playing” in the |
| Say that a trader looking at the opening prices from | | | | move, which allows you to follow in their footsteps. |
| the stock market open interprets a decline at | | | | So did the trader take the trade? Not if the downside |
| mid-morning as an OBR. If the trader is astute and | | | | move turns out to be a failed test of the overnight |
| experienced, three (3) things would come to mind | | | | lows. The moral of the story is to do what you have |
| before taking the trade. | | | | to do to figure out how to separate valid ORB trades |
| 1. The trader should look at the entire pre-opening | | | | from false breakouts. That means to continue |
| market as the opening range because it is an indication | | | | educating yourself because just as you evolve as a |
| of how U.S. stocks have responded to pre-opening | | | | trader, the trading world is evolving as well. |