Understanding the 5 Minute Opening Range Breakout Alert
These alerts define support as the lowest point in the first candle of the day. Resistance is the highest point in the first candle. The first time we break above resistance, that's an opening range breakout. The first time we break below support, that's an opening range breakdown. You can choose between 1, 2, 5, 10, 15, 30 and 60 minute candles. 15 is the most popular choice, but they are all valid.
Many trading strategies tell the trader to watch a stock closely from the open, but not to make any trades until the market has settled down. Wait for the stock to choose a direction. Use the size of the first candle to tell you how much the stock has to move before it has selected a direction.
These alerts automate the strategy described above. Instead of watching one stock closely, let our software search through the entire market to tell you what's hot. Scans like these monitor all stocks on various time frames. Let's say, for example, that you don't like to start trading until 10 o'clock. Bulls and bears will become obvious at that time if you watch the 30 minute opening range breakouts and breakdowns. In addition to picking individual stocks, you can use the alerts to get a feel for the overall market. Gauge the strength or weakness of the market based on the number of breakouts vs. breakdowns that you see.
These are powerful alerts because the stock price must pass through two forms of support or resistance. A breakout alert only occurs when the stock price breaks above the high of the first candle, for the first time all day. That means that the stock is also making new daily highs at the same time as it is crossing the resistance line described above. For the same reason, a breakdown alert means that the stock is making new lows for the day at the same time as it is passing through the support described above.
Note: Each stock has its own clock. We start the clock when a stock has its first print of the day. For NYSE stocks we ignore any prints before the specialist opens the market.
Default Settings
By default, the 5-minute opening range breakout alert is automatically triggered when a stock's price breaks above resistance for the first time during the trading day. To align with each alert, it's essential to utilize the corresponding time frame on the chart. For instance, the 5-minute opening range breakout is visualized on the 5-minute candlestick chart.
Description Column
The description column of this scan will display "Opening Range Breakout (5 minutes)", providing you with a clear indication of the specific alert that has been triggered.
FAQs
An example of an opening range breakout
Let's say you trade the S&P 500 futures contract. This means you record the high and low during the first five minutes, and you might go long if the price breaks above the high (thus the name breakout strategy).
What is the best time frame for opening range breakout? ›
How to Trade Opening Range Breakout (Example) Trading the opening range makes things simple because it gives us defined entry and exit points. There's no gray area about where to place your stop. This trade is taken usually on the 5-minute, 15-minute or 30-minute time frame and generally resolves very quickly.
What is the opening range breakout alert? ›
Understanding the 10 Minute Opening Range Breakout Alert
These alerts define support as the lowest point in the first candle of the day. Resistance is the highest point in the first candle. The first time we break above resistance, that's an opening range breakout.
Is opening range breakout profitable? ›
The opening range breakout trading strategy offers a powerful approach to capitalizing on early market moves and identifying potential trends. By carefully analyzing the initial price action of a trading session, traders can position themselves to profit from subsequent breakouts or breakdowns.
How profitable is breakout trading? ›
Does breakout trading work? Trading breakouts can be a profitable trading strategy. The risk of a false breakout is high though, which is why having a sound risk management plan is important. Furthermore, you should aim for a reasonable risk/reward ratio - at least 1:2.
Which indicator is best for breakout trading? ›
Indicators such as Moving Averages, RSI and MACD can be used to measure the strength of the breakout. Volume: An important factor to identify a breakout is the trading volumes of the stock. It is essential that the volumes traded should be high on the day of the breakout.
Which breakout strategy is best? ›
Inside bars are perhaps the most 'classic' price action breakout strategy because they show a breakout from the consolidation of the inside bar setup. On a lower time frame such as a 1 hour chart, a daily chart inside bar will look take the form of a consolidation range, sometimes a triangular range.
What is the best time frame for breakout trading? ›
Capturing volatility is key for breakout traders, and the forex market offers a plethora of opportunities in this regard. The most popular timeframes to capture short-term moves are 5 minutes, 15 minutes, and 30 minutes. Each timeframe can provide valuable insights as well as potential profit opportunities.
How accurate is the open range breakout strategy? ›
ORB Trading Strategy lets you quickly print money irrespective of the bull or bear attack with 90% accuracy. 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.
What is the open market breakout strategy? ›
The ORB strategy is fundamentally a method that identifies strengths or weaknesses in the market within the first minutes of the trading session. This involves defining a range, based on the high and low prices reached during the opening period, which typically varies from the first 30 minutes to an hour of trading.
The opening range breakout strategy in day trading involves identifying the high and low prices within the first 30 minutes to an hour after the market opens. Traders then place buy orders above the identified high and sell orders below the low.
What is the time frame for opening range breakout? ›
The opening range is the space between the high and low of the price during a given period after the market opens. This period typically lasts less than an hour and the Opening Range Breakout (ORB) strategy uses these levels as entry points. Generally, traders use time frames of 5, 15 and 30 minutes to trade ORBs.
What is the 15 minute opening range breakout strategy? ›
To trade the Opening Range Breakout strategy, you want to allow the market to settle down for the first 15 minutes. You will often get a lot of volatility at the open, so this allows you to sit out the craziness of the opening bell and let the direction work itself out. Once the first 15 minutes are up, game on.
What is the 1 minute opening range breakout? ›
By default, the 1-minute opening range breakout alert is automatically triggered when a stock's price breaks above resistance for the first time during the trading day. To align with each alert, it's essential to utilize the corresponding time frame on the chart.
What is the 5-minute entry strategy? ›
The 5-Minute Momo strategy allows traders to profit from short bursts of momentum in forex pairs, while also providing solid exit rules required to protect profits.
What is the 5-minute option strategy? ›
The 5-minute binary options strategy focuses on executing trades within a five-minute window, aiming for quick decision-making and rapid returns. Traders often employ effective techniques for maximizing profits in this short timeframe.
What is an opening range breakout example? ›
Example of Opening Range Trading
A breakout at 9:55 a.m. above the opening range and the previous day's high gives traders an indication of further upside intraday momentum, and to favor long positions over short positions.
What is the opening price breakout strategy? ›
The Opening Range Breakout (ORB) is a classic trading strategy designed to capitalise on volatility during the first few minutes following the market's opening bell. Rooted in principles laid down in the 1960s, the strategy remains relevant today for both stock and forex markets.
