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Hello ,
What you are doing is basically called as Opening Range Breakout (ORB). Its well described in Tony Crabels book.
I find that many people seem to misread this simple system. Here is what commonly people tend to employ this strategy in Day trading:
1. Go Long on a upside breakout (and Short on downside breakout)... No Brainer here.
2.PreDetermine the Bar Count (example ... take 3 bars or 5 bars as breakout benchmark). Please do consider that a 3 number of 5 mins bars are different from 3 numbers of 10 mins bars!!!
3. PreDetermine the time reference. Some prefer to do breakout of first 15 minutes , or 30 minutes.
4. Some prefer to trade on breakout of consolidation pattern.
5. Few other trade on breakout of High (or Low) of "X" number of bars (20 seems to be Favourite with some).
(The system 4 and 5 mentioned above should not be clubbed with ORB but are generic Breakout system)
(Please read the above in day trading context)
Here is my personal view on ORB trading.
1. In case you trade based on specific time frame (ex; breakout after first 30 minutes), please keep in mind that more wider your time is , your risk reward ratio will tilt towards the loss side. So a 15 minute breakout will tend to be generally more profitable than a 60 minute breakout.
2. ORB tends to reward handsomely if taken early in the start of day. But be prepared for your stop loss to suffer in this volatility.
3. During range bound days, fade the breakout. I use this method.
So here is how i trade in this strategy.
1. I trade ONLY nifty futures. All my trades are day trades.
2. I engage a 5 minutes chart.
3. I wait for the first 3 bars to form (15 mins range) and note the high and low of this range.
4. I fade the breakout of this range keeping a 3 point envelope. So for example the High of the 15 minutes range is Rs.100 and the Low of the range is Rs.50. I ask my broker to keep a "Buy Stop" order at Rs.47 and also simultaneously Keep a "Sell Stop" order at Rs.103.
5. I keep a SL of 15 points and target of 20 points. Since im fading in very early part of the day i HAVE To keep this mechanical Stop loss of 15 points. Regarding the target: I still belive that ORB is more of a gambling strategy (Personal view) and hence want to take in profit ASAP. Sometimes i bail out after 15 points.
6. All my orders are Stop Loss orders (or Limit orders if you prefer).
7. As of now i have been traying this system for about a month. So kindly use this as a reference study ONLY. Dont even think about using this in your day to day arsenal. Its NOT Tested yet.
Attaching a sample file for one of my trade.
Bye for now. Hope i was able to help.
What you are doing is basically called as Opening Range Breakout (ORB). Its well described in Tony Crabels book.
I find that many people seem to misread this simple system. Here is what commonly people tend to employ this strategy in Day trading:
1. Go Long on a upside breakout (and Short on downside breakout)... No Brainer here.
2.PreDetermine the Bar Count (example ... take 3 bars or 5 bars as breakout benchmark). Please do consider that a 3 number of 5 mins bars are different from 3 numbers of 10 mins bars!!!
3. PreDetermine the time reference. Some prefer to do breakout of first 15 minutes , or 30 minutes.
4. Some prefer to trade on breakout of consolidation pattern.
5. Few other trade on breakout of High (or Low) of "X" number of bars (20 seems to be Favourite with some).
(The system 4 and 5 mentioned above should not be clubbed with ORB but are generic Breakout system)
(Please read the above in day trading context)
Here is my personal view on ORB trading.
1. In case you trade based on specific time frame (ex; breakout after first 30 minutes), please keep in mind that more wider your time is , your risk reward ratio will tilt towards the loss side. So a 15 minute breakout will tend to be generally more profitable than a 60 minute breakout.
2. ORB tends to reward handsomely if taken early in the start of day. But be prepared for your stop loss to suffer in this volatility.
3. During range bound days, fade the breakout. I use this method.
So here is how i trade in this strategy.
1. I trade ONLY nifty futures. All my trades are day trades.
2. I engage a 5 minutes chart.
3. I wait for the first 3 bars to form (15 mins range) and note the high and low of this range.
4. I fade the breakout of this range keeping a 3 point envelope. So for example the High of the 15 minutes range is Rs.100 and the Low of the range is Rs.50. I ask my broker to keep a "Buy Stop" order at Rs.47 and also simultaneously Keep a "Sell Stop" order at Rs.103.
5. I keep a SL of 15 points and target of 20 points. Since im fading in very early part of the day i HAVE To keep this mechanical Stop loss of 15 points. Regarding the target: I still belive that ORB is more of a gambling strategy (Personal view) and hence want to take in profit ASAP. Sometimes i bail out after 15 points.
6. All my orders are Stop Loss orders (or Limit orders if you prefer).
7. As of now i have been traying this system for about a month. So kindly use this as a reference study ONLY. Dont even think about using this in your day to day arsenal. Its NOT Tested yet.
Attaching a sample file for one of my trade.
Bye for now. Hope i was able to help.
