Oct 28, 2025
Strategy
Trading strategies are essential to any trader who wants to profit, as they provide the consistency necessary for making good trading decisions. Today we will tell you about one of the most important reversal and continuation chart patterns for the stock market– opening range breakouts. We will give you a history of trading strategies based on this pattern, a number of examples, and several useful hints. Let’s go!
An Opening Range Breakout (ORB) is a trading setup where you mark the high and low of the first minutes after the open (usually the first 15).
A breakout happens when the price closes beyond one of those levels, signaling a potential trade entry in the direction of momentum.
For example, if you are defining and trading the 15-minute opening range of Apple stock, then you are evaluating the high-low range of APPLE from the opening bell to 15 minutes after it. Within this opening range, the two most important levels that you would be watching would be the high and the low price within the first 15 minutes. Look at the figure to get the idea more clearly.
Here you can see that the trading session started with a gap in price. The 15-minute range must be defined on 15-minute candles. Once the range is set, traders can switch to lower timeframes (1–5 minutes) to refine entries and stops. After the price has created an opening range, we can look for entries on the breakout.
The ORB analysis tends to work best on markets that have a clearly defined opening and closing time, like stocks. The US stock market opens at 09:30 Eastern Time (ET), which is 15:30 in much of Europe.
Remember, the US switches time twice a year - an hour ahead in the spring, and an hour back in the fall. These switches happen on different dates every year, so be sure to watch for what time it is in the US.
Opening Range Breakouts are based on the first 15 to 30 minutes after the market officially opens. For US equities, that’s 09:30 Eastern Time (ET).
Daylight Saving Time (DST): ET alternates between EST (UTC-5, winter) and EDT (UTC-4, summer). Always double-check when trading from abroad.
Conversion: 09:30 ET is 14:30/13:30 UTC depending on DST.
Other markets: Apply the same principle locally. For example, the London Stock Exchange opens at 08:00 local time, and Frankfurt at 09:00, etc.
Always base your chart on the exchange’s official local open. Using the wrong time zone will completely invalidate your opening range levels.
The Opening Range Breakout (ORB) is easiest to apply when trading stocks, because US equities have a fixed open at 09:30 ET. But traders also use ORB fin futures and Forex trading, which trade nearly 24 hours a day. The key is choosing what counts as the “opening session.”
Stocks (Equities): The classic example. Use the first 15–30 minutes after 09:30 ET to mark highs and lows. It works well because volume and volatility surge at the bell.
Futures (like ES, NQ): Futures trade almost all day, five days a week. Traders therefore often decide that their equivalent of “opening session” is the same time as the 09:30 open for stocks, or the 08:00 open for commodities. They use these times because that’s when liquidity is high.
Forex: Since there’s no single shared global open, ORB traders typically use the start of a major regional session:
The London open (03:00–04:00 ET) is used for its high volume in EUR, GBP pairs.
The New York open (08:00–09:00 ET) is used for its strong activity in USD pairs.
Some use the Asian open (07:00–08:00 ET) for JPY/AUD/NZD.
Crypto: A true 24/7 market. Here, traders sometimes use the 00:00 UTC daily candle open as the reference point, or local exchange opening times that offer volume spikes.
The principle is the same: define an early-session range when liquidity is high, then trade the breakout. The nuance lies in picking the right “opening window” for your market.
The Opening Range Breakout has its roots in floor trading, where pit traders would watch the first minutes of trading to gauge market sentiment. Over time, the approach was formalized and discussed in trading literature, and today it is a common intraday strategy across stocks, futures, and Forex. Rather than having a single inventor, ORB reflects practices that developed naturally in active markets.
Another well-known trader, Sheldon Knight, used the percentage of the difference between an N-day high and N-day low to find a range. We prefer to keep things as simple as we can. Thus, using the short-term averages or highs and lows of a certain day is less effective than using price action at the start of the trading session.
Here’s how we measure the size of a range:
To measure the ORB, take the high and low of a given period after the market opens. This period is generally the first 30 minutes or the first hour of trading.
During this period, you want to identify the high and low of the day. In addition, you will also want to account for the pre-market highs and lows, as these levels will often act like a magnet for price action after the bell rings. Let’s look at the same figure with a different measure.
You don’t need a special “calculator” for the opening range — it’s simple math:
Formula:
Opening Range Low = the lowest price during the first N minutes
Range Width = High – Low
On MT4/5:
Open a 1-minute or 5-minute chart of your stock, future, or FX pair.
Mark the first 15 or 30 minutes after the official open.
Identify the highest and lowest price in that window.
Draw a horizontal box or lines across the chart: top = High, bottom = Low.
Watch for price to break above or below this box with volume confirmation.
Once the box is drawn, it becomes your reference for the day. A breakout above or below this range is your signal.
Not every opening range breakout is worth trading. Without filters, you’ll end up trading low-quality signals where price chops around and stops you out. Check these three things before making an ORB trade:
1. Range width
The opening range should be wide enough to create a meaningful move.
A good rule of thumb is at least 0.2% of the stock’s price.
Example: If a $100 stock forms an opening range of only $0.10, that’s too tight and likely to create false signals. A $0.20–$0.30 opening range is more reliable.
2. Volume confirmation
Look for a spike in volume on the breakout.
Breakouts on low volume usually fail quickly. A breakout candle should have significantly higher volume than the average of the range candles.
Volume tells you institutions are participating — without that, the move lacks fuel.
3. Daily market bias
Align the ORB direction with the bigger picture. If a stock has been trending up on the daily chart, bullish ORB breakouts (above the range) are more reliable than bearish ones.
For longs: make sure the stock is above its daily VWAP, near pre-market highs, or in a broader uptrend.
For shorts: look for weakness below VWAP, pre-market lows, or a bearish market environment.
If you trade against the higher-timeframe trend, your chances of success are much lower.
Key takeaway: A clean breakout isn’t enough. Only trade ORBs that check all three boxes: a wide enough range, strong volume on breakout, and alignment with the bigger market trend.
The strategy consists of several steps:
Look for gaps in stock prices. Gap scanners are available online for free, so this shouldn’t be hard. In addition, you can watch our Gap and Go video. It will provide more information about gap searching.
After you find a suitable gap, open the chart of a stock and wait for the start of the trading session. For US stocks, the action begins at 16:30 GMT+2 from September to March, and at 16:30 GMT+3 from March to September.
A clean entry is only half the battle — how you manage stops and exits shapes your results over time. ORB setups give you a few choices:
Stop placement options
Inside the range (tight stop): Set your stop just inside the opening range. This minimizes risk but increases your odds of being stopped out by noise. This works best in low volatility and smaller positions.
Full range stop (conservative): Place your stop beyond the other side of the opening range. This gives the trade more breathing room but requires a smaller position. It’s useful for very volatile stocks.
Midpoint stop (balanced): Place the stop at 50% of the opening range. This is a middle ground between tight and wide risk.
Target and exit strategies
Fixed R-multiple: Aim for a profit that’s 1.5 to 2 times bigger than what you risk. If you risk $100, look to make $150–200. Many traders take some profit once they’re up 1R (equal to their risk), then let the rest run in case the move goes further.
Partial exits: Take some profit on the first strong push. After that, move your stop-loss higher (if you’re long) or lower (if you’re short) so you protect profits while staying in the trade.
Time-based exit: If the breakout hasn’t gained traction within 30–45 minutes, it’s probably losing strength. Close the trade instead of waiting for a full reversal.
End-of-session exit: If you want to hold longer, you can stay in until the market close. Just remember to cut your position size before the final hour, when trading often gets less liquid and more unpredictable.
The size of your position is just as important as your stop loss when it comes to managing risk.
Fixed fractional risk. Risk a set % of your account per trade (often 1%).
Formula: Position size = (Account × Risk %) ÷ Stop size.
Example: For a $10 000 account, 1% risk = $100. With a $0.50 stop, that’s 200 shares.
Maximum daily loss. Limit total daily loss to 2–3% of your account. Once you reach that limit, stop trading for the day. This prevents a bad session from turning into a disaster.
Key takeaway: ORBs are flexible. Your stops and exits have to match the stock’s volatility, your appetite for risk, and your account size. Being consistent in managing risk matters more than chasing big winners.
Even when they follow clear rules, traders often make the same mistakes when trading ORBs. Knowing about them and how to prevent them is key to consistent long-term success.
Taking breakouts from ranges that are too narrow. If the opening range is only a few cents wide, that’s just noise. Use a minimum filter (like 0.2% of price or a spike in volume) to avoid fakeouts.
Chasing after the breakout candle. Entering a trade late often means buying the top of a short squeeze or selling the bottom of a flush. Instead, wait for the breakout candle to close or look for a pullback before entering.
Ignoring volume confirmation. A breakout without strong volume usually doesn’t last. Always compare breakout volume to the opening bars. If it isn’t clearly higher, be cautious.
Trading against the daily trend. Align with the bigger picture when possible. Shorting a stock in a strong uptrend and buying in a downtrend lowers your odds.
Holding through news spikes. Earnings reports and breaking news headlines can make ORBs unreliable. If news breaks, drop the setup.
Oversizing positions. ORB trades can move pretty fast. If your position is too big, you’ll feel extra pressure and stress. Keep the size small until you’ve tested the strategy and built up confidence.
Not using stop-losses. Failing to use stops or cancelling them can turn one small planned loss into a huge one. Set your stop as soon as you enter the trade.
Bottom line: Slow down, apply filters, and journal every ORB trade. Tracking what invalidates your setups will help you avoid repeating the same mistakes.
Consider taking partial profits at +1R or halfway to your target. This reduces exposure and locks in gains, but the remaining position still carries risk — always set a stop-loss. This way, your trade will become risk-free. It will help you withstand times when trades go wrong.
Don’t enter a trade you are not sure about, or you will become nervous and less focused.
Wait for the candle to close above the opening range to avoid false breakouts.
On this 5-minute chart, AMD opened and quickly formed its first 15-minute range between roughly $149.70 and $152.67 (as shown in the red box). This zone was the first battle between buyers and sellers.
At 09:45 ET, the price broke above the range high of $152.67 on strong buying pressure (see entry arrow). This breakout confirmed bullish momentum, giving a clear signal to go long. A protective stop-loss was placed just below the range low at $149.70, limiting downside risk.
From there, AMD steadily trended higher throughout the session, reaching the $158.18 level by late afternoon (see take-profit arrow). This offered traders a nearly 2:1 reward-to-risk ratio.
Takeaway: A bullish ORB setup is triggered when price clears the opening range high on volume. With stops set below the range and targets at logical resistance levels, it gives traders a structured way to play early upside momentum.
On this 5-minute chart, Apple opened and set an initial range between about $201.91 and $203.69 (see red box). This range showed the morning balance between buyers and sellers.
Once the price broke below $201.91, sellers took control, offering a short entry opportunity. The stop-loss was placed just above the range high at $203.69, keeping risk under control.
From there, the price trended lower into the $198.50 zone (see take-profit arrow). This move returned about 1.5R relative to risk, making it a straightforward example of a bearish ORB.
Not every opening range breakout plays out cleanly. Here’s a common trap:
On this 1-minute Apple chart, the opening range is highlighted in red. The price initially broke above the range, but the volume never picked up — the bars below show volume staying flat, which was an early warning sign.
Soon after, price slipped back inside the range, confirming a failed breakout. This created a short trade opportunity at the re-entry point (Enter), with a stop just above the failed high (Stop).
From there, momentum shifted lower:
Target 1 was the midpoint of the range, where partial profits could be taken.
Target 2 was the opposite side of the range, completing the failed ORB.
Takeaway: when the price breaks the opening range without volume confirmation, the breakout often fails. Spotting this lets you trade the reversal with clear risk and reward levels.
Before applying the ORB strategy with real capital, it’s important to test it out on past data. Use at least 1-minute intraday data to capture the opening range and breakout mechanics accurately. Define a fixed testing protocol:
Time windows: Test different opening ranges (first 5, 15, or 30 minutes) to compare sensitivity.
Range filters: Set minimum range thresholds (at least 0.2% of price) to filter out weak signals.
Exit logic: Compare outcomes using fixed targets, trailing stops, and time-based exits.
Volume confirmation: Track whether trades with above-average volume worked better.
Expect that results will vary by ticker, market cycle, and volatility regime. No backtest will give you a perfect equity curve. The point isn’t to find a magic formula that never fails, but to understand how the strategy works out in different conditions. You can then use that knowledge to trade with realistic expectations and find which versions (bullish, bearish, failed ORB, pullbacks) fit your style best.
When is the best time window for ORB trades?Most traders use the first 15–30 minutes after the market opens (09:30–10:00 ET). That’s when volatility and volume peak, and the opening range forms clearly.
How do you handle large opening gaps?If a stock gaps far beyond the prior day’s range, be cautious. Gaps often lead to fake breakouts. Wait for volume confirmation or look for the first pullback to enter instead of chasing the initial move. (See Variants section).
How long should I hold an ORB trade?There’s no fixed rule. Many traders hold for 30–90 minutes or until the breakout loses momentum. Others exit by the end of the session if trading intraday only. Use fixed R targets, time-based exits, or partial profits as part of your plan (see Risk Management section).
Can I backtest the ORB strategy?Yes. Use 1–5 minute historical data to simulate trades. Test different opening windows (15 vs. 30 min), range filters, and stop/target rules. Avoid overfitting, which is when you design the strategy too specifically for one stock or period. (See Backtesting & Expectations).
Is ORB suitable for small accounts?Yes, if you keep risk small (for example, 0.5% of your account per trade) and trade liquid stocks to avoid slippage. Smaller accounts benefit most from tight stops and high-liquidity tickers. (See Position sizing frameworks).
Opening Range (OR): The high and low during the first 15–30 minutes after the open. It forms the basis for breakout signals.
Opening Drive: A strong move right after the open that sets the tone for the day.
Gap: A price jump between the prior day’s close and the current day’s open. If the gap is too large, ORB breakouts may be less reliable..
Range Width: The distance (in price or %) between the opening high and low. Used as a filter to ensure the setups are tradeable.
Midpoint: The 50% level of the opening range. Sometimes used for stops or intraday support/resistance.
Failed Breakout (Failed ORB): When price breaks out of the opening range but quickly reverses back inside, often triggering stop losses.
Pullback Entry: Waiting for price to break out and then retrace to the breakout level or VWAP before entering.