Opening Range Breakout (ORB): A Day Trading Strategy Explained

The opening range breakout (ORB) is a classic day trading strategy. You mark the high and low of the first minutes of the session, then trade a break above the high or below the low. The opening range often captures the market's first view of the day, and breaks from it can lead to strong moves.

Defining the opening range

Choose a fixed period after the open, commonly:

• 5 minutes: early signals, more false breaks.
• 15 minutes: a balance used by many traders.
• 30 or 60 minutes: fewer, slower signals, wider ranges.

The range is the high and low of that period.

Basic rules

• Long on a break above the opening range high.
• Short on a break below the opening range low.
• Stop: the other side of the range, or the middle of the range for a tighter stop.
• Target: a multiple of the range height, the next key level, or a trailing stop.

Filters that are often used

• Relative volume: stocks trading far more volume than usual.
• A catalyst: earnings or news. See gap trading.
• Range size: very wide ranges make the stop large and reward small; very narrow ones may produce false breaks.
• Market direction: taking longs only when the overall market is also strong.
• Time limit: only taking breaks within the first hour or two.

Position sizing

Because the stop distance depends on the range, sizes change every day. Use fixed risk per trade. See position sizing. A wide range might mean a small position, or no trade at all.

Common pitfalls

• Chasing a break that has already run far. See FOMO.
• Trading every stock that breaks, which multiplies correlated risk on market-driven days. See correlation risk.
• Ignoring costs. Spreads are widest near the open.

Measure it

ORB is easy to measure because the rules are clear. Record the range length, the side, whether filters were met and the result in R. After 100 or more trades, compare expectancy by range length and filter. In TradeThink, the reports show results by setup and entry hour, and each trade's price chart shows exactly where you entered relative to the range.