One of the things I did during the open house was walk attendees through my morning routine.
You see, I send out my video watchlist the night before to help everyone get familiar with the symbols, setups, and potential plays for the following day.
And in the morning we revisit them…
Which came as a shock to me when I found out how many attendees didn’t have a routine or trading plan…
For some of you… when the opening bell rings… you just want to get into stocks because it’s so exciting… everything is flashing red and green as you’re trying to find trades and the bright lights entice you.
Well, some traders just buy around the open for no apparent reason… just because the stock is moving around the open.
If you don’t know, right around the opening bell is a very volatile time to trade. You see, there are traders getting into positions and some traders getting out of positions that they held overnight.
In other words, there’s a lot of noise.
That said, a lot of traders actually have trouble finding clear entries around the open.
One simple technique I taught was the Opening Range Breakout (ORB).
Opening Range Breakout
What’s the ORB and how can it benefit your trading?
Well, the ORB helps us initiate positions in stocks that have strong trends… but no picture-perfect setup. For example, some times, I’ll see stocks with strong trends… but there is no clear chart setup telling me to enter the trade.
Now, with the ORB, we monitor stocks right around the open time… typically, I’ll keep an eye on these for around 30 minutes.
You see, after 5, 10, 15 or 30 minutes after the open… stocks tend to pull back into the prior day’s range. Keep in mind, the shorter the timeframe you’re looking at… the more aggressive your entry will be.
If you understand the ORB… you can find entries and figure out which stocks are trending.
Here’s how it comes into play.
Before the market opens… you have to be prepared with a list of stocks that might interest you. Now, I actually send out a watchlist to my clients in the evenings so they know what to trade for the next morning.
Here’s an example of one of the stocks on my watchlist for today.
Now, with the ORB… you don’t necessarily have to have a trading plan ahead of time… but you should develop one before you get into the trade.
For the most part, I use the ORB on stocks that have had big moves in the previous trading session… but don’t really have a clear pattern.
Once you find stocks that interest you… you pick a range breakout timeframe that suits your risk tolerance.
What we’re looking for is the stock to break either the 5, 10, 15 or 30 minute candle. Again, the shorter the chart time frame… the more aggressive the entry.
Here’s what I’m talking about. In the open house yesterday morning, we actually were looking at ROKU.
If you look at the daily chart above, Roku Inc. (ROKU) has been a strong stock that’s just been trending higher… but with the lines I look at, there was no clear signal to get in. However, that doesn’t mean there isn’t a clear entry and that’s where the ORB comes into play.
Thereafter, we would look at the 5-minute chart.
As you can see, ROKU actually traded above the previous 5-minute candle and there was a clear entry there at $91.27.
You could also look at the 15-minute time frame.
Basically, what we’re looking for is a green candle here if we’re looking to get long. On the 15 minute chart, there’s a clear entry at $91.54, just as the stock broke above that price after the first 15 minutes of trading.
Now, you can also do this with the 30 minute time frame.
As you can see, the ORB helps to remove the noise from getting into stocks in the morning… and allows you to spot trending stocks. If this is still unclear to you, make sure to check out the replay of the open house, as I went over this pattern in detail.