Daily Futures Trading Update
Visiting The ORB Trading Principle | RJO FuturesPosted 02/13/2017 12:20PM CT |
The ORB, or Opening Range Breakout, is one of the most logical, time-tested, and effective intra-day trading strategies used across all markets. There are many variations about how to use this classic entry signal. First, consider the set up or opening range. As every trader knows, market moving developments don’t stop at the closing bell. New inter-market information continues to flow around the clock, even when a trader’s preferred market is closed. Large institutions wait for markets to officially open before placing their orders for the day. For the purpose of this trading strategy, a market’s opening range is defined by its high or low over the first 30 minutes of the trading day. These levels often mark the initial areas of resistance and support. As a general rule, a breakout above the opening range high signals the bulls are growing more aggressive whereas a breakdown through the opening range low suggests the bears are gaining control. Once the opening range is set, a trader could place a “buy stop” above the high and/or a “sell stop” below the low. If the market breaks out at either end of the range by 1-2 ticks, cancel the other working order. The best practice is to cancel entry orders if they haven’t triggered in the first two hours of the trading day. By waiting for a breakout beyond the established opening range, traders can increase the probability that they will be aligned with the day’s dominant trend!