The Opening Range Breakout is a trading strategy we use during the New York session. This session is key for market dynamics because of the strong volume injection that usually happens between 9:30 and 16:00 EDT.
That spike in activity creates a great environment for spotting trading opportunities.
The Opening Range Breakout is one of those high-probability strategies we rely on at Chart Champions, and here’s how we apply it to day trading.
The Opening Range Breakout Strategy
When the New York session kicks off at 9:30 EDT, volatility quickly takes over the market. Institutions step in and reveal their intentions during the first 15 minutes, so we use this window to mark the highs and lows.
This time window is what we define as the Opening Range, a simple way to map price action and set key levels that give us the context we need to execute high-probability trades.
To apply the ORB strategy correctly, we need two key tools:
- Opening Range
- RTH VWAP
Optionally, we can also use the Fibonacci tool.
What is the RTH VWAP
VWAP is a dynamic support and resistance line that blends price with volume and tracks the entire session. The RTH VWAP is simply the VWAP calculated from the Regular Trading Hours (9:30 – 16:00 EST).
On TradingView, you can use the Anchored VWAP as your RTH VWAP. Just anchor it at 9:30 EST (right at the New York open) and let it play out as the session develops.
- Price above RTH VWAP: Buyers are in control, and the VWAP line will act as support.
- Price below RTH VWAP: Sellers are in control, and the VWAP line will act as resistance.
What is the Opening Range
The Opening Range is the first 15-minute window from the New York open. During this time, we mark the Opening Range High (ORH) and the Opening Range Low (ORL).
These two levels become our key reference points. From there, we look for a breakout, depending on how the price behaves in relation to the RTH VWAP.
The ORB Strategy with VWAP Filter
Once the Opening Range is set, we wait for a breakout. But instead of trading every breakout, we add one key condition, RTH VWAP alignment.
Entry Criteria
Long Setup: We can look for a long position if the price breaks above the ORH and is also above the RTH VWAP.
Short Setup: We can look for a short position if the price breaks below the ORL and is also below the RTH VWAP.
Stop Loss positioning
The stop loss will be placed on the opposite side of the breakout. However, sometimes this SL can be wide, making risk management tricky.
In these cases, we can use one of the following methods:
- Reduce the position size for better risk control.
- Place the stop at the midpoint of the Opening Range.
- Use context and other key levels to position the stop loss.
Using context for stop placement is something only advanced traders should attempt. It requires solid experience in futures trading and a strong understanding of the various key levels that can serve as reference points.
Keep in mind that each of these stop loss methods will directly impact your trade management.
Study the statistics of each approach, and based on the results, create rules and strategies that give your setups the best possible probabilities.
Take Profit positioning
The standard take profit target is 1.5 times the size of the Opening Range.
Since the ORB is mainly a day trading strategy, another option is to close the position by the end of the day.
Using Fibonacci for TP
Another way to set your take profit is by using the Fibonacci retracement tool. Go to your Fib settings and add these custom levels as a reference:
1, 0.5, 0, -0.5, -1, -1.5
- The -1.5 Fib level represents the 1.5x Opening Range target.
- If you reduce your stop loss to the midpoint of the Opening Range (the 0.5 Fib level), you can also adjust your take profit to the 1 Fib level.
These customised Fibonacci levels will help you place take profit and stop loss levels with much more precision.
Download The ORB Strategy Cheat Sheet
At Chart Champions, we know how important it is to have the right tools at your fingertips.
That’s why we’ve created the Opening Range Breakout Strategy Cheat Sheet, which you can receive straight into your inbox by entering your email address and clicking the button below.
Not working? No worries, enter here to receive and download.
This cheat sheet is a quick-access guide so you can review the key points of the strategy anytime you need.
