Intraday Open High Open Low Trading Strategy

Intraday Open High Open Low Trading Strategy

In this article, I will discuss the Intraday Open High Open Low Trading Strategy in detail. Please read our previous article, where we discussed the GAP Trading Strategy. As part of this article, we will discuss the following Open High Open Low Trading Strategy pointers in detail.

  1. The logic behind the Open High, Open Low Trading Strategy
  2. Where it occurs in the big picture
  3. Rules for trading OPEN HIGH LOW STRATEGY
  4. With live example
Intraday Open High Open Low Trading Strategy

The original name of the strategy is Open Drive. From a buy-sell perspective, we called it open high and open low.
Open high= sell
Open low= buy
So open rive and open high open low are both the same.

The logic behind the strategy

These are directional moves with strong hand participation and conviction.

Where does it occur? Location
  1. It occurs most of the time after a sideways price action (tight price channel), or
  2. You can also spot it at the start of a trading session.
  3. From a strong supply or demand zone

Suppose an open drive occurs after a sideways price action. In that case, it indicates that either strong buyers or sellers were accumulating their positions in the sideways price action, or afterward, they started aggressive buying or selling activity to move the price.

If, at the start of a trading session. An open drive is generally caused by participants who have made their market decisions before the opening bell. The market opens and moves aggressively in one direction. Fueled by strong smart money activity, the price never returns to trade back through the opening range.

The rule for selling open drive or open high strategy
  • Where is the action playing out? (location in the big picture). Reason to take the trade. It best works if a breakout from any sideways price action is a gap from a strong supply or demand zone
  • First, 5 min candle(opening candle) should be a big red candle
  • Open = High. For easy reference, a 2-3 points buffer will be considered equal, not carrying much weight
  • The first candle opens to close around the lower of the candle (preferably)
  • Volume must be high
  • Minimum Risk: Reward(R: R)=1:2(next support area)
  • Breakout entry after opening range or first candle low(for open high set up)
  • The price must be below vwap for the sell

Let’s do it as an example

Open high strategy for entry
  1. Wait for the first candle to complete. It should be a big red candle
  2. Volume should be high.
  3. The 2nd inside candle should be a Doji or narrow candle
  4. low of second candle equal to low of 1st candle
  5. Declining or lower volume on 2nd candle
  6. 2nd candle range stays within the bottom 2/3rd of 1st candle
  7. The price must be below vwap
  8. Stop loss above your entry candle or day high as per your risk

Intraday Open High Open Low Strategy

Let’s do an example

Today, I took this trade

On a daily time frame, the price increases with volume decreasing and closing near resistance. I clearly indicate that this move will not break the resistance.

Rule for sell open drive or open high strategy

Today, the price gap is up to resistance. Then, wait for 1st candle to complete

What did the first candle tell me?
  • A big red candle
  • Open = High
  • The first candle opens to closes around the lower of the candle
  • Volume very high

All these indicate bearishness. So sold in next candle. As shown in the image below

Intraday Open High Open Low Trading Strategy

Intraday Open High Open Low

Open High Open Low Intraday trading Strategy

Intraday trading Strategy Open High Low

You can find open low or open high in our scanner

https://docs.google.com/spreadsheets/d/1v02Aq9B6xTa7WZ8OP6NUO0d-3dKMKFGrxXVv5kMjF6k/edit#gid=0

open low or open high scanner

You can create your above scanner here: https://dotnettutorials.net/lesson/how-to-make-own-day-trading-scanner/

Intraday Open High Open Low Trading Strategy Summary:

The Intraday Open High Open Low (OHOL) strategy is a popular technique among day traders who look to capitalize on stocks or assets that show a specific pattern at the market opening. This pattern is characterized by the price at the opening being the high or the low for the day, suggesting that the price will move in the opposite direction for the rest of the trading session. Here’s a step-by-step guide to using the OHOL strategy:

Screening for OHOL Candidates:
  • Market Open: As soon as the market opens, identify stocks or assets that have their opening price as either the high or the low of the day so far.
  • Time Frame: The validity of the OHOL signal typically depends on a certain time frame after the opening, such as the first 15 minutes to 1 hour.
Confirming the Pattern:
  • For Open High: If the open is the same as the high and the price starts moving down after the open, it indicates potential selling pressure.
  • For Open Low: If the opening is the same as the low and the price increases after the opening, it indicates potential buying pressure.
  • Volume: Ensure there is significant trading volume to support the move, as higher volume can provide confirmation.
Entry Points:
  • Sell Signal: In the case of an Open High scenario, if the price moves below the opening range, it can be taken as a sell signal.
  • Buy Signal: In the case of an Open Low scenario, if the price moves above the opening range, it can be taken as a buy signal.
Setting Stop Loss and Take Profit:
  • Stop Loss: Set a stop loss just above the high for a sell trade or just below the low for a buy trade.
  • Take Profit: Take profit levels can be set at previous support or resistance levels or using a fixed risk-reward ratio like 1:2 or 1:3.
Trade Management:
  • Monitoring: Actively monitor the trade, as intraday price movements can be volatile and rapid.
  • Adjusting Stop Loss: Move the stop loss to break even or to lock in profits as the trade moves favorably.
Exit Strategy:
  • Time-Based Exit: Consider exiting the trade before the market closes to avoid overnight risk, especially if it doesn’t hit the take-profit level.
  • Reversal Signs: Exit if price action indicates a reversal of the trend.
Risk Management:
  • Position Sizing: Determine your position size based on the stop loss and the capital you are willing to risk on a single trade.
  • Daily Loss Limit: Set a maximum daily loss limit to protect your capital from any adverse market movement.
Record Keeping and Review:
  • Journaling: Keep records of all your trades, including your rationale for entry and exit, to review and improve your strategy.
Tips for Success:
  • Avoid Noise: The first few minutes after the market opens can be very volatile. Wait for the noise to settle before making a decision.
  • Price Action Confirmation: Look for confirmation in the price action. Breakouts or breakdowns with confirming candlestick patterns can be stronger signals.
  • Avoid Emotional Trading: Stick to your plan, and don’t let emotions drive your trading decisions.
Common Mistakes to Avoid:
  • False Breakouts/Breakdowns: Be cautious of false signals and confirm with volume and additional indicators if possible.
  • Overtrading: Don’t force trades if the setup is not clear.

The OHOL strategy is quite straightforward but should be employed with a thorough understanding of market behavior and individual stock characteristics. It is also essential to consider news and other events affecting stock prices. As with any trading strategy, there is no guarantee of profit, and it is critical to practice sound risk management at all times.

In the next article, I will discuss the PIN Bar Trading Strategy in detail. Here, in this article, I try to explain the Intraday Open High Open Low Trading Strategy in detail.  I hope you enjoy this Intraday Open High Open Low Trading Strategy article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts.

2 thoughts on “Intraday Open High Open Low Trading Strategy”

  1. Sir I am from odisha and don’t have any laptop or pc to create own scanner for trading.
    So could you please provide me your scanner

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