If you’re looking for a straight forward and objective trade that you can take every day to gain consistency you’re in the right place.
As a professional day trader of more than 15 years, this is by far the easiest and least time intensive trading strategy to implement.
Most traders overcomplicate their trading with tons of indicators, look at too many charts, and become paralyzed with too much analysis. If you’re looking for a simple trading strategy you can trade each and everyday then this is the approach for you.
The path to improvement is paved with consistency.
The key component to great trading strategy is being consistently repeatable. Consistency is the path that leads to a disciplined trader.
The reason this strategy works is by being simple and hands off. Too many parameters and constraints and everything starts to fall apart.
The Best Markets to Trade the “ORB”
I prefer to trade the futures markets (particularly the E-mini S&P) for simplicity sake when it comes to taxes. Futures are taxed at what’s called 60/40 tax treatment meaning 60% are taxed at long-term capital gains and 40% short-term capital gains.
It also means that all of your trades are combined into one simple gain/loss form.
For this reason I execute this strategy on the E-mini S&P. You could trade the NQ, YM, RTY, etc. just as easily.
- Wait for the first 15-min bar to form.
- Using a buy and sell stop, place an order 1 tick above the high and 1 tick below the low.
- Whichever way the market breaks is the direction you trade.
- This is in the form of a buy stop and sell stop
- Place your stop on the opposite end of the 15-min candle.
- Alternatively you can place your stop at the midpoint of the candle, just be consistent trading it the same way each time.
- If the candle is larger than 20-pts then using the midpoint stop helps to reduce risk.
- 20 pts, that’s it.
The critical piece of this strategy is to essentially set it and forget it, which is actually hard for a lot of people. You can easily transpose the opening range breakout strategy across other markets including stocks, just make sure there is ample volume or you can run into slipping upon entry.
When not to trade?
- FOMC Meeting Wednesday’s
- Futures Expiration Friday’s
- Market holiday’s
- When we fill the prior day’s gap in the first 15-mins
So I encourage you to give the opening range breakout trade a try. It will build that habits of consistency that lead to discipline in your trading. Try it out on a paper account for a month before going live and look at your results. You do some simple back-testing as well for added confidence.
If you have a small account or are just getting started begin on the micros (/MES). You can easily move to the E-mini’s and add more contracts as you get more trades under your belt and grow your account.
Hi Tim, So am I correct is saying you changed your stop loss from a 4pt stop to a full length of the 15 min candle stop? Has this process been more profitable over time?
That’s right. The results were nearly 2x as profitable. If the candle is more than 20 pts I’m fine using the midpoint of the candle as the stop. That works really well.
In the video you share that if the range of the 15 minute candle is more than 20 points you go about halfway for the stop out. What if the candle is say 40 points plus, on one day looking back at Nov 4th it was 46 points long, would you still go halfway back or consider another amount? Thanks.
Good question James. On a day like that where even half the candle is larger than 20 pts I would be inclined to pass given such a large move already occurred. The other option would be to use 20 pts as your stop. That’s the max stop I would use to keep it at 1:1.
Thank you so much Tim! (ﾉ◕ヮ◕)ﾉ*:･ﾟ✧
This strategy is fantastic. I love how easy this is to execute. 5m and I’m done for the day. Holy hell!
Akin to flipping a weight coin. Perfect for a busy schedule.
Question though… I noticed it didn’t do so hot in June/July, which makes sense because there’s usually less volatility in the summer.
I wonder if you’ve developed any way to filter these months? Other than just taking a vacation in the Summer, which is not a bad idea. 🙂
Hey JC, as of now I only have a couple years worth of trades which means only a handful of June and July’s in my data set, not enough to rule out all of them. I do agree though June/July and even August are much lighter volume than the rest of the year. I’ll keep you posted if I have any new findings.
Appreciate the response Tim. I’ll accumulate more data and see if I can find an easy solution.
what do you mean by fill the gap…
Filling the gap would mean trading at the prior day’s closing price. I use the 4:15 EST settlement price as the “close.”