Open Range Breakout Strategy Description

The idea behind open range breakout trading is that the first few minutes of the trading day are a crucial indicator of the market direction and price movements for the rest of the trading day. The range between the highest and lowest prices in the first trading period is called the "open range." If the price breaks out of this range, it is considered a signal for a trend reversal or continuation. The most well-known strategies are the "London Breakout Strategy" and the "Cash DAX Open Breakout."

This Open Range Breakout Expert Advisor strategy – is preferably traded in the 1 minute chart. The open range, also known as the opening span, is fixed. It is speculated on a breakout after the official market opening from this range.

This strategy can be applied in numerous markets such as stock indices (DAX, EuroStoxx, Dow, S&P 500 etc.), bonds (Bund futures etc.), commodities (WTI, Brent Oil etc.), precious metals (gold etc.), forex and stocks.

Open Range Breakout Strategy Variants

DAX Cash Breakout Strategy

The “Open Range Breakout” in the context of the cash DAX refers to a trading strategy based on the German stock index DAX that aims to profit from price fluctuations during the opening of the trading session.

1. Determination of trading timeThe DAX trading session begins at 9:00 a.m. (Central European Time) and lasts until 5:30 p.m. The trading strategy focuses on the first few minutes or hours after the opening of this session. There are many different approaches to defining the time frame of the open range. While some traders choose the high and low between 9:00 a.m. and 10:00 a.m. for the DAX, others recommend using, for example, 8:00 a.m. and 9:00 a.m., 8:00 a.m. and 9:15 a.m., or 9:00 a.m. and 9:45 a.m. I prefer the DAX range from 8:01 a.m. to 9:00 a.m. Since large jumps can occur again at 8:00 a.m., I decided to wait another minute.
   
2. Identification of the opening rangeAt the beginning of the trading session, the price range (high and low) of the first candles or minutes is measured, often referred to as the "opening range." This range is sometimes also called the "opening range."
   
3. Set entry point: If the price rises above the high of the opening range, a long (buy) position is opened. If the price falls below the low of the opening range, a short (sell) position is opened.
   
4. Set stop loss and take profitAs with other trading strategies, stop-loss orders are set to limit risk and take-profit orders to lock in profits. These can be set based on technical analysis or risk management principles.
   

The open range breakout is a widely used strategy used by many traders to profit from volatility movements at the beginning of the trading session.

S&P500 and DowJones Breakout Strategy

The "open range breakout" in the context of the S&P 500 and the Dow Jones Industrial Average (Dow Jones) refers to a trading strategy based on the two major U.S. stock indices. Similar to other markets, this strategy aims to profit from price fluctuations that occur during the opening of the trading session.

Applying the Open Range Breakout to the S&P 500 and the Dow Jones would work similarly to my previous explanation of the trading strategy in the context of the cash DAX:

1. Determination of trading timeThe trading session for the S&P 500 and the Dow Jones begins at 9:30 a.m. Eastern Time (ET) and lasts until 4:00 p.m. ET. The trading strategy focuses on the first few minutes or hours after the opening of this session. For the Dow or S&P 500, the recommended time frame for the open range is the first 45 minutes after the stock market opens, which is usually between 3:30 p.m. and 4:15 p.m. However, every trader has their own strategy here.
   
2. Identification of the opening rangeAt the beginning of the trading session, the price range (high and low) of the first candles or minutes is measured, often referred to as the "opening range." This range is sometimes also called the "opening range."
   
3. Set entry point: Ähnlich wie beim Kassa DAX wird eine Long-Position (Kauf) eröffnet, wenn der Preis über das Hoch der Eröffnungsspanne steigt, und eine Short-Position (Verkauf), wenn der Preis unter das Tief der Eröffnungsspanne fällt.
   
4. Set stop loss and take profit: As with other trading strategies, stop-loss orders are set to limit risk and take-profit orders to lock in profits.
   

London Breakout Strategy

The London Breakout Strategy is a popular trading strategy in the foreign exchange (forex) market that relies on exploiting volatility during the opening of the London trading session. This strategy aims to profit from the large price fluctuations that often occur when the London market opens.

1. Determination of trading timeThe London trading session begins at 8:00 a.m. GMT and lasts until approximately 5:00 p.m. GMT. The trading strategy focuses on the first 1-3 hours of this session, when market participation and volatility typically increase.
   
2. Identifying the breakout area: At the beginning of the London session, the highs and lows of the previous trading session (often the Asian session) are determined. Some traders also use a predefined number of candles (for example, the first four candles of the London session) to determine the breakout range. The area between the highest high and the lowest low is considered the "breakout range."
   
3. Set entry point: When the price breaks above the defined breakout area, a long (buy) position is opened. When the price breaks below the breakout area, a short (sell) position is opened. Some traders use stop orders to automatically enter the trade as soon as the breakout occurs.
   
4. Set stop loss and take profitTo limit risk, traders typically set stop-loss orders below the breakout range for long positions and above the breakout range for short positions. Take-profit orders are set to lock in profits, often at a specific price target or based on technical indicators.
   

It is important to note that the application of this strategy to different markets and indices will depend on individual market conditions and volatility.

Statistics / Backtest “DAX Cash Open Breakout” from 2019 & 2020 – You can find the current backtest hier

Beispieltrades