ORB trading strategy has become very famous among the trader’s community. It is because it lets you make quick money and traders love this technical analysis set up. However, quick money can also quickly take away your hard earned money.
Moreover, ORB lets you quickly print money irrespective of the bull or bear attack.
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ORB is nothing but the opening range breakout trading strategy. You may find it when a range has been broken after a certain period of time from the market opening time.
You need to allow the markets or stocks to form the range. In ORB trading strategy, certain things you need to consider first.
First, you need to take the time frame so that a range formed. Different traders make use of different ranges like 5 minutes, 15 minutes, 30 minutes and so on. Secondly, you need to find out the high and low of that range of a particular stock or index.
So, I prefer to consider 2 hours from the market opens as an opening range. I believe that the first one hour will be volatile and then market consolidates in the next hour.
Moreover, if the stock open with a huge gap up or gap down, then avoid trading for the day. Sometimes, it is wise not to trade.
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.
Opening Range Breakout Summary
Range: 2 Hours that is from 9.15 AM to 11.15 AM – Indian Standard Time. This time is for NSE & BSE based stocks and derivatives.
Chart: 5 Minutes Candlestick Chart
High/Low: Find out the High and Low of the range
Thumb Rule: ORB trading strategy rules say, you need to go long whenever the high of the range breaks. Similarly, you need to short whenever the low of the range breaks.
Volume: High buying volume if you are tempted to go for long and high selling volume if you want to go for short.
Stop Loss: Initially, you can put the Stop Loss at the low of the range. You can gradually trail the SL if the stock price is moving in your favor.
Exit Plan: Exit if Stop Loss hit or when your target met. Don’t be greedy and set your target before you enter in a trade. Normally, you can set your target near the Support and Resistance level.
So, follow the rules guys and you’ll be rewarded. Having said that, I request you to backtest the ORB trading strategy as per your needs and requirement. You can tweak the elements I have used and see what results it produces.
I have a lot of other things that also need to be considered and those are something that I will cover in my next post.
Opening range breakout trading strategy lets you quickly fetch some money from day trading. However, try to exit as early as possible and lock your profits.
I believe this strategy will surely help you to make money from online trading.
If you want to add some other parameters that make this strategy more profitable, then please comments below. Your views and suggestion are always welcome.
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This Post Has 23 Comments
i was not able to find this indicator in zerodha…
You won’t find anything about ORB trading strategy in Zerodha nor in any other technical software.
This is because ORB is not an indicator rather it is a trading setup that helps you take a trading decision.
To understand completely, please read the post till the end. Read it and backtest the strategy before you try it in the live market.
Explained very nicely with the example !
Could you please let us know how did you calculate support-1 and support-2 in the example?
You can use Pivot Points as Support and Resistance.
Even i have been trading recently with ORB strategy with stocks, earlier I used to trade manually by following it with only bank nifty or some other news based stocks. But its hard to do it with stocks manually, later started using some trading bots which automates this ORB, where am able to directly trade from Telegram app itself, you can just google “orb strategy trade from telegram”, you will come across many trading bots using which you can place trades in Zerodha or upstox account.
That’s a great info Vishal. Certainly trading bot help a lot
From how much time are you using ORB bot? What is the performance ?
I analyse and trade manually and not use any bot.
even i upload my details, again and and ur database window popup in reading area. pls corect it
Where exactly you are facing problem?
At the end of the post it is mentioned like, lot of other things need to be considered and those will be covered in followup posts, has it been posted ? If so, please provide the link.
What is the best time frame to consider opening range ? In you post, it is said that 2 hours.
by the way very well explained. Great work !! , worth reading !!!
Thank you for your feedback. You will get mail for any updates soon.
Thanks for the post. The way you explained the post is good. This post helped me to learn some new things about ORB strategies. Keep posting. Please let me know for the upcoming posts.
Thank you for your feedback. Will let you know for any upcoming post directly to your email id.
Where can we get open low and high live indicator or screener.i hope this would be available.we should have visibility by 9.25am every day.
you can use the below link
You have done a great job writing this article to keep us informed.
Very lucid explanation….Would like to get updates
Good. Thank you. Nicely explained.
We tried it extensively and has a very good winning ratio but still it is not profitable because hard to main good RRR
tweak your strategy as per your needs and goal
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Do you have any algo script for ORB ?
You can create algo without coding. follow this link and registered. Link-> https://tradetron.tech/?ref=akmeanalytics