ORB Trading Strategy Bank Nifty

Opening Range Breakout trading strategy has become very famous among the trader community. It helps to make quick money that’s why traders love this technical analysis setup. This Trading Strategy is applicable only for Intraday trading.

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.

You might be wondering whether the ORB trading strategy is simple!

Opening Range Breakout Trading Strategy

In ORB trading strategy, certain things you need to consider first

  • You need to allow the markets or stocks to form the range.
  • If the stock open with a huge gap up or gap down, then it is not wise to use this trading strategy.

ORB Range:

  • First, you need to choose the time frame of the chart.
  • Traders can choose different time frame ranges like 5 minutes, 15 minutes, and 30 minutes and so on.
  • After that, you need to find out the high and low range from the chart of a particular stock or index.
  • So, I prefer to consider 2 hours from the market opens as an opening range. 2 Hours that is from 9.15 AM to 11.15 AM – Indian Standard Time. I believe that the first one hour will be volatile and then market consolidates in the next hour.

Chart: 5 Minutes Candlestick Chart Time frame.

High/Low: Find out the High and Low of the range.

Trading rules:

  1. Buy when the stock moves above the Opening Range High.
  2. Sell when the stock moves below the Opening Range Low.

General Rules?—? Applicable for both Buy and Sell

Rules for Buy

CHART

  • Buy when the stock price crosses above the opening range
  • Initial Stop loss?—? Low of the Opening Range.
  • We prefer 14:00 for the last entry.

Rules for Sell

  • Sell when the stock price crosses below the opening range.
  • Initial Stop loss?—? High of the Opening Range.
  • We prefer 14:00 for the last entry.

The rule for Stop loss

  • For Buy: Stop should be placed at Opening Range Low.
  • For Sell: Stop should be placed at Opening Range High.
  • You can gradually trail the SL if the stock price is moving in your favor.

Opening Range Breakout Trading Strategy Consideration

  1. Good consolidation before the breakout.
  2. A clean breakout
  3. High volume near the breakout level. High buying volume if you are tempted to go for long and high selling volume if you want to go for short.

Exit Plan:

  • Exit if Stop Loss hit or when your target met. Don’t be greedy and set your target before you enter into a trade. Normally, you can set your target near the Support and Resistance level.
  • We prefer 15:20 for exit time. If stop loss does not hit till 15:20 PM then considers exiting at market price.

ORB Setup Example in Chart – Bank Nifty Future

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 Bank Nifty Future contract in NSE

At the time of writing this post, the Bank Nifty future market price was around 26000 and its lot size is 20. That means one point movement in Bank Nifty yields 20 points of profit or loss in one lot.

ORB Trading Strategy Bank Nifty

Bank Nifty Future Chart | Expiry: 29-11-2018 | Chart Date: 22-11-2018

  • The above chart is a Bank Nifty Future contract chart and the date is 22nd November 2018. The expiry of the contract is 29th November 2018.
  • As I mentioned earlier Bank Nifty 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 the 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 the blue rectangular 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 Bank Nifty Future below 26228

Sell:

Short Bank Nifty Future below 26228

You can see that once it breaks the opening range with volume.

Target:

  • 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.
  • 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 levels.

Stop loss:

  • 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.

Very Important Point in Opening Range Breakout Trading Strategy

  • 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.
  • 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 comment below. Your views and suggestion are always welcome.

(5) Comments

Leave A Comment

All fields marked with an asterisk (*) are required