Stock Trading Setups

1. OPENING RANGE
BREAKOUTTRADING
STRATEGY
Nasir SaeedTareen –nsktareen@gmail.com
+92.3018212311
Trade Set ups -1

2. 1. The open is near the high or low of the day – Data Shows
2. The market open is the most important price of the day
3. The open, and specifically the opening range, gives us plenty of opportunities to build trading strategies
4. It gives us defined entry and exit points.There’s no gray area about where to place your stop.
I. Traditionally, when the strategy became popular in the 1990s, the opening range is the first hour of trading
after the open.
II. As time moved on and traders got access to faster data feeds and worked on shorter time frames, some opted to
narrow their definition of the opening range to the first half-hour, 15 minutes, even one minute in some cases.
III. To establish an opening range based on the 15-minute timeframe, we would simply take the high and low of the
first 15-minute bar, then we have our opening range.
IV. Assuming we had a bullish bias on Stock, we would take the long signal on the second bar. If the stock just traded
within the opening range for a few bars, the trade’s probability of profitability goes down with each subsequent
bar. We also wouldn’t take short signals (breakdown below opening range) because of our bullish bias.
V. These strategies are simply a starting point. It’s clear that there is some statistical significance to market behavior
on the open but trading purely off of that is probably going to yield mediocre results.We know that there’s no free
lunch.
There are additional things you must do to put the odds further in your favor and keep you out of the bad setups.
i. Trade Stocks in Play ii. Have a Directional Bias iii. LongerTerm Price Action
Day Trading With Short Term Price Patterns and Opening Range Breakout.
Trade Set ups -1

3. How to Trade Opening Range Breakout -
Example
This trade is taken usually on the 5-minute, 15-
minute or 30-minute time frame and
generally resolves very quickly.
For scalpers the most popular time frame is 5-
minutes and for intra-day swing traders they will
most likely use the 15-minute of the 30-minute time
frames
In the example you will notice that the opening
range is indicated between the two dotted red
lines. We are looking at a 5-minute chart of NVDA
which is known for being a big mover whether it’s
in play or not.
This is a great setup because it opened above
the VWAP failed to break over pre-market highs
and then closed below the VWAP showing that
sellers were stepping in. The opening range was
between $109.41 and $108.95, which is pretty
tight for this stock.
Entry would have been on the break below
$108.95 with a stop at 109.41. When prices
flushed through it kept falling hard and was a fairly
straight forward trade that could have earned well
over a point in profits.
This is a high probability setup and when it hits
can easily give you 3 to 1 risk/reward and often
even more
Trade Set ups -1

4. Final Views
When trading opening range breakout’s it’s important to look for other key levels as well if the stock is
oversold or overbought. It will help confirm price action and will give you greater confidence trading the
breakout.
The breakouts also work better on stocks in play that have a high relative volume for that time frame
whether be for 5-minute or 30-minute. You’ll also want to look for setups where the opening range bar
opens above VWAP and then closes below.
Here’s a good check list for trading an opening range breakout:
• Have a bias: long or short, don’t take in either direction
• Establish your bias based on the daily chart’s price action. Trade in direction of the trend/supply-
demand imbalance
•Catalyst
• News
• Earnings
•Criteria
• Momentum, volume, low float, liquidity
Trade Set ups -1