How to Trade the Opening Range

One of the most popular intraday trading techniques used by professional traders is the Opening Range Breakout. Since its conception, the Opening Range Breakout has evolved into a number of different strategies. The first extensive presentation of this idea came in Toby Crabel’s book “Day Trading With Short Term Price Patterns and Opening Range Breakout.” There is also a book by Mark Fisher’s, “The Logical Trader” and the eMESA mechanical trading system. The Opening Range Breakout (ORB) has been the subject of many discussion threads within trading forums.

As a part of your trading system, you can define the Opening Range however you like. Those of you who are Better Trade followers might compare this to Darlene Powell’s First Hour Low/High. Some professional daytraders only use 5 minutes or 15 minutes. However, for our short introduction, we are going to define our Opening Range as the first 30 minutes of trading. At the thirty minute mark, we can draw a line on our chart or make a mental note of the highest price and lowest price during this time frame. So the basic premise of defining the Opening Range is that your bias for trading the underlying stock will be determined by where the stock is trading relative to the Opening Range.

Here is a list of rules you can use for trading the Opening Range:

* the stock is trading above its opening range you should have a bullish
* if the stock is below the opening range you should have a bearish bias
* Until the stock is trading outside of the opening range the opening range does not offer a bias.
* Use a profit target to identify risk:reward ratio before initiating the trade
* Use a stop to protect you from losing trades
* The Trend is Your Friend - Breakouts in the direction of the trend are most successful
* Volume equals market sentiment

The Opening Range Breakout strategy anticipates the continuation of a stock’s momentum as it trades through the high of the opening range and the high of the day. The high and low of the opening range often represent significant price levels in determining a stock’s direction for the day, and therefore these are good levels to use to establish positions and determine stops.

The ORB set up can be exploited by many different trading styles including scalping, swing trading, and position day trading (day trades held for a good portion of the trading day). A scalper can trade the volatility, support, and resistance often found at these levels, while a position day trader can use the break out or retracement to the high of the OR to establish a well defined, low risk trade. And the swing trader can use the OR break out time the entry into a trade that met all the longer term criteria of the trade.

To learn more about developing a personalized Trading Plan to maximize your profits, Check out our blog @ http://blog.accendotraders.com

To view video examples of our Trade Plans on YouTube, go to http://www.youtube.com/accendotraders

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Article Source: http://EzineArticles.com/?expert=Michael_Glass

The Lipstick Indicator

Today’s blog post brought to you by MarketClub:

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Ladies are putting down the lipstick and picking up the necessities.

US consumers have been used to spending hundreds on self-gratifying purchases; things that entertain us, make us look rich and make us attractive. However, the recession has emptied the movie theaters, the BMW dealerships and the cosmetic counters.

The things we once wanted are being put on the back burner to afford the things we really need. I learned how dire times really are when Elizabeth Arden (NASDAQ:RDEN) and Estee Lauder (NYSE:EL) came out with their sales and earnings forecast last Friday.

Take a look at this video of Estee Lauder and see where we got short this stock using our “Trade Triangle” technology. What’s nice about this technology is that it can use previous market action to help you get in and ride the trend (to profit from news and earnings). How valuable would that type of information be to you?

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