Open Break Trade?

Discussion in 'Trading' started by El Cazador, Jan 10, 2002.

  1. Anyone know what RealityTrader's open break trade is and how it works? Thanks

  2. Threei


    One of risky setups, not for conservative traders. Certainly not for low volume thin stocks. Usually applies during first 30 minutes of trading, price range $5-30.

    Simple description without discretionary variables:

    Open High and Open Low break setups

    Make sure range is 25 cents or less. If stock breaks high of the range, go long with stop at the low of the range. If stock breaks low of the range, go short with a stop at the high of the range. Scalpers look for 1 to 1 or 2 to 1 reward to risk. Holders scale out into 2 to 1 reward to risk and look for a trend.

    Some of variables:

    - Price of the stock matters. Break of 5 cents range is not indicative for $25 stock. Even on cheap stocks I wouldn't go for anything less than 10 cents
    - Range should be defined by disctinctive movement. If stock moves up from the opening and goes straight above opening price + 25 sents I wouldn't consider it a buy by default. Rather it should pause and pullback within the range or consolidate under the high
    - Broader market/sector direction. Usually matters, sometimes not, like when we deal with stock that is news driven or rarely depends on market like it's often the case with security stocks for instance

    Those are more or less obvious, traders add their own discretionaries often.

    Best regards,

  3. Thank you very much.