What is Opening Range Breakout (ORB)?

The Opening Range Breakout (ORB) is a classic day trading strategy that capitalizes on the momentum created when price breaks out of its initial trading range after the market opens. This is the primary strategy powering our free SPY and QQQ trading alerts.

The ORB Setup for Day Trading

Defining the Opening Range

The opening range is established during the first 15-30 minutes of trading:

Opening Range High (ORH) = Highest price in first 15-30 min
Opening Range Low (ORL) = Lowest price in first 15-30 min

Common Timeframes for SPY and QQQ

TimeframeBest ForCharacteristics
15 minAggressive day tradingMore signals, smaller range
30 minBalanced approachStandard for our free alerts
60 minConservativeFewer signals, larger range
Pro Tip: We use Webull for fast execution on ORB trades. Their extended hours trading lets us monitor pre-market action before the opening range forms.

ORB Entry Rules for Free Trading Alerts

Long Entry (Bullish Signal)

  1. Price closes above the Opening Range High
  2. Volume is above average (ideally 1.5x or more)
  3. Enter on the close of the breakout candle

Short Entry (Bearish Signal)

  1. Price closes below the Opening Range Low
  2. Volume is above average
  3. Enter on the close of the breakdown candle

These are the exact rules used in our AI-powered trading signals.

Stop Loss Placement for Risk Management

Conservative: Place stop at the opposite side of the opening range

  • Long trades: Stop at Opening Range Low
  • Short trades: Stop at Opening Range High

Aggressive: Place stop at the midpoint of the opening range

  • Tighter stop = smaller risk, but more stop-outs

Learn more about risk management and volatility considerations.

Profit Targets for Day Trading SPY and QQQ

Fixed Target Method

  • Target 1: 1x the opening range width
  • Target 2: 2x the opening range width

ATR-Based Method

  • Target = Entry + (1.5 * ATR)

Trailing Stop Method

  • Move stop to breakeven at 1R profit
  • Trail with 2-period high/low

Best Conditions for ORB Trading Signals

The ORB strategy works best when:

  1. High relative volume in the first 30 minutes
  2. Clear directional bias from overnight futures
  3. VIX is moderate (15-25 range) - learn about volatility
  4. No major news scheduled mid-day
  5. Strong pre-market gap up or down

Charting Tools for ORB Trading

Recommended: We use TradingView to identify and track opening range levels. Their alerting features notify us when price approaches key breakout levels.

Position Sizing for Day Trading

Position Sizing Formula

stop_distance = abs(entry_price - stop_price)
risk_amount = account_size * risk_percentage  # typically 1%
position_size = risk_amount / stop_distance

Example for SPY Trading

Account: $50,000
Risk: 1% ($500)
Entry: $595.00
Stop: $593.50
Stop Distance: $1.50

Position Size = $500 / $1.50 = 333 shares

Filtering Low-Quality ORB Setups

Avoid ORB trades when:

  • Opening range is very narrow (< 0.3% of price)
  • Opening range is very wide (> 1.5% of price)
  • Volume is below average
  • Price is chopping within the range for too long
  • Major economic data is releasing after 10am

Our AI trading system automatically filters out low-quality setups.

Common ORB Trading Mistakes

  1. Entering too early - Wait for the candle to close above/below the range
  2. Ignoring volume - Low volume breakouts often fail
  3. Wide stops - Don’t let one trade destroy your week
  4. Overtrading - One good ORB setup per day is enough
  5. Holding overnight - ORB is a day trade strategy

Practice Before Live Trading

  1. Paper trade for at least 30 sessions
  2. Track every trade in a journal
  3. Calculate your win rate and average R multiple
  4. Only go live when consistent in simulation
Practice for Free: Both Webull and Robinhood offer paper trading accounts to practice before risking real money.

Get Started with ORB Trading

Step 1: Open a Trading Account

Ready to trade? Open a funded account with one of our recommended brokers:

  • Webull{:target="_blank" rel=“nofollow sponsored”} - Best for fast execution
  • Robinhood{:target="_blank" rel=“nofollow sponsored”} - Best for beginners
  • Tastytrade{:target="_blank" rel=“nofollow sponsored”} - Best for options

Step 2: Set Up Your Charts

Get TradingView{:target="_blank" rel=“nofollow sponsored”} for professional charting and set up alerts on your breakout levels.

Step 3: Follow Our Alerts

Subscribe to our free AI-powered alerts to see high-probability ORB setups on SPY and QQQ daily.

Related Resources:

This strategy is for educational purposes. Always practice proper risk management. Some links are affiliate links - see disclosure.