Opening range breakout: early entry
by Toby Crabel
Early entry is defined as a large price movement in one direction within the first five minutes after the
open of the daily session. A study of early entry is essentially a study of price action, and the type of price
action that takes place on early entry shows that participants are urgent about entering the market. It is a
distinct recognition of either a profitable or dangerous situation.
It should be noted that directional moves of this nature are relatively rare and may occur only 10% of the
time. Most days (70% to 80%), prices exhibit rotation or choppy action and the first five to 10 minutes of
trading are sluggish and directionless without a clear movement away from the opening range.
The early entry price action is ideal when using an opening range breakout for entry. An opening range
breakout is a trade taken at a predetermined amount above or below the opening range. The open should
act as one extreme of this range.
I have observed two types of early entry. The characteristics of Type 1 (Figures 1 and 2) are as follows:
The first five minute time period has a larger range than normal. ("Normal" is roughly defined as the
average of the preceding 10 days' first five-minute ranges.)
The opening of the day is on one extreme of the five-minute bar and the close of the five-minute bar is on
the opposite extreme. The second five minutes shows an equal thrust in the direction of the first