[idaxtrader]

When judging the market action after entry compare it to the ideal, early entry with immediate profit and persistent follow through thereafter. Action that varies from the ideal is suspect.

The ORB can be utilized as a general indicator of bias everyday.

Whichever side of the stretch is traded first will indicate bias in that direction for the next two to three hours of the session.

If nothing else this information alone will keep you out of trouble.

Multiple contracts can be used when entering on an ORB or ORBP. This allows for some profit-taking as the move continues guaranteeing at least some profit in the case of a pullback to break-even stop.

In summary, the open is a market primary. Without an understanding of its importance and the market action around it, its difficult to come to correct conclusions about market direction.

On any day that such a breakout occurs within the first ten minutes of trade, the information is overwhelmingly in favor of a continuation of that move.


Early Entry (EE) is defined as a large price movement in one direction within the first five minutes after the open of the daily session. This is ideal price action when using an ORB for entry. The open should act as one extreme.


The characteristics of a Type 1 EE are as follows. The first five minute unit has a larger range than normal (norm is roughly defined as the average of the preceding ten days (first five-minute ranges). Open 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 five minute period.


A Type 2 EE is extremely powerful and is characterized by an excessively large range in the first five minutes, quite possibly bigger than the previous twenty day's first five minute periods. An equal thrust in the next period is difficult to manage but a general drift in the direction of the first five minutes is likely with an acceleration after further accumulation has occurred.

An open outside the previous day's high or low sets up an intraday Upthrust or Spring in most cases.

The most important types of price action have been described already and occur in the first 5-10 minutes of trade, but there are times when even with a defined thrust the market will not follow through, and in fact, will sometimes reverse completely.This is defined as EE Failure and is associated with a momentum increase in 'the opposite direction of EE.

An increased range relative to the previous unit and units shows an increase in momentum. Ideally, this should not happen, and when it does it usually indicates an EE failure is occurring. As a rule, no counter move five minute unit (bar) should have a range larger than the first five minute bar.


In fact, any 5-minute bar against EE that is relatively large compared to previous bars that confirmed EE, will imply a shift in momentum and possibly EE failure. Neutral or confirming price action is crucial just after the EE indication. When Entry is taken on a pullback, narrow range bars should be present on the retracement. A counter move with a momentum increase is a warning that failure is occurring.

Profits should be taken after an ORB entry when recognizable shifts in momentum occur like that at.

Price action should not fall back into the first 5-minute bar as quickly as it did here.

The type of price action that takes place on EE shows that participants are urgent about entering the market.

A clear EE and an ORB should not be faded and suggests that a one directional move is coming up.

Absence of EE without clear getaway on an ORB calls for trading range action with a market generally unable to trend. When trading is defined one can anticipate reversals throughout the session.

I have found that these measured moves off the open set the tone for the rest of the day.

These are very high percentages and suggest that after a bull move of this magnitude (off the open) you should look to buy a break.

The tests support an important conclusion about the market's nature. That is, the market's tendency to carry in the direction of a defined move off the open.
The market shows a tendency to trend in the direction of a move off the open. Sell a low momentum rally after the initial decline.

Supports the conclusion that the market has a tendency to trend after some definition of direction. Buy low momentum breaks after the initial rally off the open.

The move off the open by the predetermined amount usually was profitable if followed in that direction. In other words, buys were profitable when taken after a move above the open and sales were profitable when taken after a move below the open.

NR4: The narrowest daily range relative to the previous three days daily ranges compared individually.

NR7: The narrowest daily range relative to the previous six days daily ranges compared individually.

The suggestion from these results is that one should be looking to go with a forceful move off the open after a contraction and not willing to do so after an expansion. In fact fading price action off the open, with trend, after an expansion is a consideration.

If nothing else, one should be aware of the dangers of ORB trades the day after a big directional day. Caution is necessary after expansions.

WS4: Is a day with a daily range that is larger than any of the previous three days ranges.


WS7: Is a day with a daily range that is larger than any of the previous six days ranges.

Computer studies suggest that Inside Days (ID) provide very reliable entries in the S+P market.

Inside day is defined as a narrow range day that has its daily range completely within the previous days range.

A doji line is then defined as a day that shows the difference between the open and closing prices to be very small.

The strategy is to look closely at the movements that follow the doji line and be ready to enter the market aggressively once subsequent price action gives a clear indication of the markets direction. Logically, the opening range breakout technique would seem a valid means of determining the direction of price after a doji.

Results were impressive and confirmed the conclusion that a doji line precedes reversal action or trend type action.