Opening range breakout in gold trading

An opening range breakout (ORB) strategy marks the high and low of the first part of a session, the opening range, and trades a break of either side. Common windows on gold are the first 15, 30 or 60 minutes after the London open, the COMEX open at 8:20 a.m. New York time or the US equity open at 9:30 a.m.

How it applies to gold trading

Session opens bring new participants and often set the direction for the next few hours. An ORB tries to join that direction once it shows itself. The range also defines risk: a stop on the other side of the range or at its midpoint, with targets at a multiple of the range or at nearby liquidity such as the previous day high.

The weaknesses are false breaks, which are common on gold around 8:30 a.m. data, and ranges that are too wide on volatile days, making the stop large. Many ORB traders skip days when the opening range is over a set multiple of ATR.

Worked example

Example (hypothetical numbers): the first 30 minutes of the New York session range from 4,004 to 4,016. A buy stop at 4,017 fills, with a stop at the range midpoint, 4,010 ($7). On 0.15 lots that risks $105. The target is 1.5 times the range above the high, 4,034.

A common mistake

Trading the ORB on high-impact data mornings without adjusting. Data can create the range and break it in seconds.

See also: Breakout, New York session, Asian range, London open.

Frequently asked questions