ORB Trading Strategy – Winning Trade Set Up for Day Traders
You might be wondering whether the ORB trading strategy is simple! In fact, this is not as simple as it sounds. You need to consider some more factors that need to be taken care of before you just hop into a trade. So, you need to figure out whether the opening range breakout is a real one or fake. The answer is “Volume” and so you also need to consider a high volume at the time of breakout. However, the volume can contribute in either way. So, if volume increases with heavy buying, then the stock price might go up. In the same way, if volume increases with heavy selling, then the stock price may go down. If high of an opening range break with heavy buying coming into the market, then the stock price will go up. Similarly, break below low of the range with heavy selling gives you an opportunity to short it. This part is really tough for you to analyze and it may check your patience. So, this is very important and you need to have a hawk eye on it. Basically, what I am trying to convey to you that the price action must be synchronized with the volume. Once, it happens, you may consider the breakout is real and not the fake one. People lose money because of their impatient behavior and not the markets. So, you need to sit tight and hold your nerve, until you get the conviction to trade. Let the trade setup to be formed and then enter in it. I am sure you will be on the winning side.ORB Setup in Chart – BankNifty Future Contract
So, let’s take an example which helps you to understand the ORB trading strategy in a better way. For instance, let’s take the BankNifty future contract in NSE. At the time of writing this post, the BankNifty future market price was around 26000 and its lot size is 20. That means one point movement in BankNifty yield 20 points of profit or loss in one lot.
BankNifty Future Chart | Expiry: 29-11-2018 | Chart Date: 22-11-2018
The above chart is a BankNifty Future contract chart and the date is 22nd November 2018. The expiry of the contract is 29th November 2018. As I mentioned earlier BankNifty or any other contract must form the range to start with. So, here, in this case, I have taken 2 hours of range from the market opens. As market opens at 9.15 AM IST and after 2 hours of trading you get the range at 11.15 AM IST. For your reference, the range has been marked in blue rectangle area in the chart. It makes a high at 26339 and low at 26228. You’ll notice that the Range is broken at 13.00 with a long red candle. That’s the opening range breakout which is marked by a green arrow. Moreover, the breakout is genuine as you can see that there is an increase in selling volume simultaneously. That’s the confirmation now that you can short BankNifty Future below 26228. While placing your short order, don’t you ever forget to put the stop loss. So, your stop loss will be the high of the opening range. As soon as it started to move on your way, keep trailing your stop loss gradually. You also need to set your target as I mentioned earlier. So, your first target will be the Support 1 level and if it also breaches then wait for Support 2 level. You can see that once it breaks the opening range with volume, it reaches its first target very easily. At this time, either you can book profit or trail your stop loss. Furthermore, trail your stop loss in such a way that if suddenly price reverse, you won’t make any loss. However, don’t be greedy and book profit whenever you are getting a decent return. If you are a high-risk trader, you can keep trailing your stop loss and book profit near support 2 level.