The ORB (Opening Range Breakout) strategy is a popular intraday trading technique that focuses on the price movement during the first few minutes after the market opens. Traders watch the highest and lowest prices during this initial period, called the "opening range." When the price moves outside this range, either above the high or below the low, it signals a potential trade opportunity. This strategy helps traders catch early momentum and profit from strong price moves.
What is the Opening Range?
The opening range is the highest and lowest price recorded in the first 5 to 30 minutes after the market opens. This range shows the early market sentiment and volatility. Traders use this range as a reference to find when the price breaks out, which indicates the start of a new price trend. Most traders prefer using a 15-minute opening range because it balances early price action and reduces noise.
The opening range acts like a price boundary. If the price moves beyond this range, it shows strong buying or selling pressure.
How Does the ORB Strategy Work?
In the ORB strategy, traders wait for the price to break out of the opening range. If the price breaks above the opening range high, traders take a buy position. If it breaks below the opening range low, traders take a sell position. This breakout indicates the start of a strong price move, so traders enter early to capture profits.
It is important to place a stop-loss order just inside the opening range to limit losses if the price reverses. Traders often use targets or trailing stops to protect their profits as the trade moves in their favor.
Why is ORB Strategy Popular Among Traders?
The ORB strategy is popular because it is simple, clear, and effective. It helps traders enter trades based on strong market moves right after the opening bell. Many intraday traders use this strategy because it has defined entry and exit rules, making it easier to manage risks and profits.
This strategy works well in markets with good opening volatility, like the Indian stock market. It helps traders catch early trends driven by overnight news or market sentiment changes.
Important Tips for Using ORB Strategy
To use the ORB strategy well, choose your opening range time carefully, usually 15 minutes. Watch for clear price breakouts above or below this range. Always use stop-loss orders to protect your money if the price moves against you. Avoid trading during very low volatility or major news events as these can cause false signals.
Patience is key. Wait for the breakout confirmation before entering a trade. Combining ORB with other tools like volume or moving averages can help make better decisions.
Can Beginners Use the ORB Strategy?
Yes, beginners can use the ORB strategy because it has simple and clear rules. However, beginners should practice on demo accounts first to understand how the opening range works and how to manage trades properly. Practice helps avoid mistakes and builds confidence.
With time and experience, the ORB strategy can help new traders start intraday trading with more confidence. It is also good to combine this strategy with other basic trading tools for better results.
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