Opening range breakout
by Toby A. Crabel
A trade taken at a predetermined amount above or below the opening price of a given day is called an
opening range breakout (ORB).A narrow range four pattern (NR 4) is a day with a daily range that is
narrower than the previous three days' daily ranges compared individually. In my experience, trades using
the ORB technique on a day following an NR 4 pattern tend to coincide with trend day activity—and,
consequently, successful ORBs.
Figures 1 and 2 demonstrate an ORB on the day following the NR 4 pattern. The table in Figure 3 shows
the results of testing the relationship between the NR4 pattern and trending markets with this technique.
action on the day of an ORB. There were four tests per market and the only difference between them was
the point of entry above or below the open. Trades were entered on a stop at the indicated level with an
exit on the same day's close.