about opening range breakout

"opening range breakout" is based on the notion that the early time in the session tells much to us about the sentiment of the market.

However many futures almost do not have the "opening range". They are tradable almost all around the clock. In such cases how the "opening range breakout" can be applied? or just exclude these markets when using this method.

Thanks in advance.

I think if you find a time by looking at intraday market data that appears on the whole to set the "tone" for the day then this is worth looking at. It does not have to be the opening range and due to multiple time frames all markets are now traded it is mad to assume opening range is the best bet.
Can equally apply to intra-day/daily/weekly time frames. All it is doing is using an assumption that if price breaks more than a certain amount from some historic range then it is more probable to continue than retrace.

twalker said:

I think if you find a time by looking at intraday market data that appears on the whole to set the "tone" for the day then this is worth looking at. It does not have to be the opening range and due to multiple time frames all markets are now traded it is mad to assume opening range is the best bet.
Can equally apply to intra-day/daily/weekly time frames. All it is doing is using an assumption that if price breaks more than a certain amount from some historic range then it is more probable to continue than retrace.

Click to expand...

When you refer to multiple time frames, what you really mean is continuity of overlap of markets attributable to their individual and collective opening and closing times, around the world and around the clock, do you not ?

Yes, that would be more correct. Thanks

seesound said:

"opening range breakout" is based on the notion that the early time in the session tells much to us about the sentiment of the market.
However many futures almost do not have the "opening range". They are tradable almost all around the clock. In such cases how the "opening range breakout" can be applied? or just exclude these markets when using this method.
Thanks in advance.

Click to expand...

Each market has its own special considerations. FOREX for example can be viewed as having 3 main overlapping sessions, each with its own characteristics which will also vary according to the pair traded.

Equity futures on the other hand are somewhat different. I do much of my trading on the mini DOW (YM) futures contract. Whilst it is possible to place and have orders executed near to 24 hours/day, the market is very illiquid out of normal US market hours and trading it during that time is a completely different ball-game. The vast bulk of volume on the contract is traded during main market hours and this is bolstered by a separate pit-traded contract based on the same index so, applying a US market hours template to the futures chart and making due allowance for any opening gap, I find the 'opening range' as you've outlined it to be a valid and useful thing to watch. Nothing mechanical about it though - it's just one of a myriad of things to be aware of.

That's correct. Very well explained indeed.

but the open price is a primary indicator, it reflects the market's sentiment after reflecting all the available infomation, as Steve Nison also stated. So it is also my suspicion that the Candle Stick techniques may not work well in around-clock tradable markets such as forex, at least daily.

It may be and it may not be, you cannot make generalisations of that sort without examing the facts.

I got it clear. Thanks, everyone.

Another question, what does the "opening range" mean in Toby Crabel's work. Many people just assume it as the "opening price". is that right?

seesound,

For Crabel, a predetermined ( ie optimized) number of ticks are added and subtracted from the open as breakout points...to capture 'trend days'

re: (ie optimized). Imho, 'optimizing' is best done across a very short number of bars (like in the current and possibly most recent swings) rather than on the whole history of the instrument. Some recommend only play the most volatile / wide range instruments but applying it to congestions, contractions that have overstayed themselves works well too...

see http://partners.futuresource.com/fbp/2003/071103.htm , etc

Also along these lines, Mark Fisher applies some ballsze techniques.

hth

zdo

Below is the conversation between ZDO and me. Very useful to everyone interested in ORB. It is posted with permission from ZDO. Many thanks for his comprehensive answer and kindness.

Originally Posted by seesound
Hi ZDO. Thanks for your reply.

In the post you said:

"For Crabel, a predetermined ( ie optimized) number of ticks are added and subtracted from the open as breakout points...to capture 'trend days'"

My question is whether the opening range is just the opening price or it isa price range during the early maket (for example, the first five minutes since the market opens)

Looking forward to your reply.


Kind Regards

Seesound


seesound,

Before electronic exchanges there was an actual 'opening range' that was published on some exchanges to give 'off the floor' an idea of the 'moods' at the opening. Wide opening range could portend wilder days, narrow range could signal not much happening. The size of trades at the open were watched closely also.

Since the advent of electronic and 24 X 7 markets, each trader is pretty much left to create his own 'Open'. and I don't believe that first few official minutes are as telling anymore because traders can now truly act 'before the bell' and enter many small orders to implement large trades 'around' the open etc.

So, for Crabel, etc kinds of Breakout work, the Open can now just be the one first tick. (that unfortunately you must now disignate). For example, I use times that are on average 1 1/2 hour earlier than the official opening for US indexes, bonds, and currencies for some techniques. You could do all kinds of work on how markets are 'passed off' internationally, (rolling openings?). because there is no true opening anymore and the remnants of the old openings will most likely fade even more in the coming years as the 'globe' gets more involved.

In general , good zones, rather than precision, is more important over the long haul. Precise, read that optimized, points work fine for a while then fail in the most 'preverted' ways. Accumulating positions as price moves through a zone works much better in the long term as you can pile on before and/or after resistance (or support) points, etc. and also use an array of stops instead of one... etc

Good fortune in finding what works for you.

zdo

btw. It seems that both your question and my answer would serve others better made public and placed back up on the board. I will leave that decision to you though. all the best...

Range breakout systems can be used at any time. Simply wait for an impulse (you can use ADX or similar if you cannot see them), and surround the impulse with a range.

You can also use price distribution charts (http://www.tradestationaddons.com/images/technologies/ActivityBar.jpg) to form your range over any time period.

opening range for equities

is generally between the US market open (9:30 EST) and 10ish. The opening range is further defined by the rush of overnight orders being executed at the opening bell, a consequent surge in price through 9:45am, and then the infusion of short selling often instigated by market makers wanting to cover their now short accounts. By 10, reversals are usually underway, or about to do so and on non-trending days, the post 10am period will usually see a drift in price and trading whereas on trending days, a continuance of price direction will occur, extending the opening range.

According to Fisher, the first 15 minutes of trade defines the entire day's price, 30% of the time but I believe he may be referring to futures?

I like to play my short fades closer to 10. First, I watch for the DOW to break below its 13 period EMA on the 5 minute chart. Other traders insist that the DOW futures are one step ahead of the game as far as tipping their hand, though I haven't seen that. Once the DOW crosses its EMA, it is remarkable how equities will follow almost exactly. However, when equities are moving in the opposite direction from the DOW, they can often be played long as contrarian instruments to the DOW's overall pull.

ronfalcone,

Good post! Thanks.

re:

ronfalcone said:

Other traders insist that the DOW futures are one step ahead of the game as far as tipping their hand, though I haven't seen that.

Click to expand...

the NQ / ND are almost one step ahead of the game on average 3 days a week.

zd

ZDO said:

ronfalcone,

Good post! Thanks.

re:

the NQ / ND are almost one step ahead of the game on average 3 days a week.

zd

Click to expand...

so I've heard. I just might update my Prophet subscription to include NQ and ND and try using them. Certainly won't hurt.

thanks

ronfalcone said:

so I've heard. I just might update my Prophet subscription to include NQ and ND and try using them. Certainly won't hurt.

thanks

Click to expand...

re feeds -NQ is enough.

Later,

zd

ronfalcone said:

so I've heard. I just might update my Prophet subscription to include NQ and ND and try using them. Certainly won't hurt.

Click to expand...

I've been with Prophet for some time now and very happy with them until I received my last bank statement which indicated that they'd taken rather more than usual from my account. When I queried it with them, they replied saying that they'd put their prices up. An annual increase is to be expected - but not at 25% and taken without informing their customers in advance? I'm not impressed! (Seesound - apologies for ranting off topic!)
Tim.

seesound said:

"opening range breakout" is based on the notion that the early time in the session tells much to us about the sentiment of the market.

However many futures almost do not have the "opening range". They are tradable almost all around the clock. In such cases how the "opening range breakout" can be applied? or just exclude these markets when using this method.

Thanks in advance.

Click to expand...

THERE A PROBLEM i get stoped out reguarly

spunkyblonde said:

THERE A PROBLEM i get stoped out reguarly

Click to expand...

spunkyblonde,

Stop using that strategy! It only works when you’re not trading it…

Actually:
how are you determining your stops?
are you reversing at your stop?
do you use the same strategy any and every day?

zd

DBPhoenix started two excellent threads on the Elite Trader site called 'Keeping It Simple' and 'Keeping It Simple 2', journaling his NQ trades using a very simple ORB strategy based on price action and trend-lines. Anybody serious about trading futures intra-day (or anyone trading using price action) should benefit by reading them.

The links are:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=11410
http://www.elitetrader.com/vb/showthread.php?s=&threadid=15110