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Open High or low break retest strategy for all market

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Open High or low Break and retest
Open High or low Break and retest

Open High or low break retest strategy for all market

In this article, I will walk you through an incredible and easy scalping strategy designed to help you make consistent profits in the market. This strategy is straightforward, beginner-friendly, and requires no bias or complex indicators. It sets up frequently within the first few hours of the market open, making it an excellent choice for traders of all experience levels. Let’s dive into the details and learn how to implement this strategy effectively, this time focusing on a different trading pair: EUR/USD.

Introduction to the Strategy

What is Scalping?

Scalping is a trading style that involves taking advantage of small price movements in the market. Scalpers aim to make numerous small profits throughout the day rather than holding positions for long periods. This strategy can be highly profitable if executed correctly, especially during high volatility periods.

Why This Strategy?

  • Beginner-Friendly: No need to guess the market direction.
  • Quick Setup: Forms within the first few hours of the market open.
  • Mechanical Approach: Clear rules for entry, exit, and stop-loss.

The Opening Range Break and Retest Strategy

Step-by-Step Guide

  1. Mark the Opening Range: Identify the high and low of the first few minutes after the market opens. This can be done on 1-minute, 5-minute, or 15-minute charts, depending on your preference.
    • Example: On a 5-minute chart, the first 5-minute candle’s high and low form the opening range.
  2. Wait for a Break with Strong Displacement: Observe the price action to see if it breaks above or below the opening range with strong displacement (significant price movement).
  3. Look for a Retest: After the price breaks the range, wait for it to retest the broken level.
  4. Enter the Trade: Enter the trade on the retest with stops above/below the opposite side of the opening range.
  5. Set Profit Targets: Aim for a 2:1 risk-reward ratio.

Visual Explanation

Table 1: Key Components of the Strategy

Component Description
Opening Range The high and low of the first 1, 5, or 15-minute candle
Strong Displacement Significant price movement breaking the opening range
Retest Price returning to the broken level
Entry Entering the trade on the retest
Stop-Loss Placed above/below the opposite side of the opening range
Profit Target Aiming for a 2:1 risk-reward ratio

Example of the Strategy in Action

Let’s consider a scenario where we apply this strategy on EUR/USD over a week.

Day 1: No Trade

  • Opening Range: High at 1.0900, Low at 1.0880.
  • Action: Price breaks below but does not retest. No trade.

Day 2: Successful Trade

  • Opening Range: High at 1.0920, Low at 1.0900.
  • Action: Price breaks above 1.0920 with strong displacement, retests, and moves up.
  • Entry: 1.0920
  • Stop-Loss: 1.0900
  • Profit Target: 1.0960

Back Testing Results

To validate this strategy, we back-tested it on EUR/USD over a week. Here are the results:

Table 2: Back Testing Results

Day Entry Price Stop-Loss Profit Target Result
Day 1 N/A N/A N/A No Trade
Day 2 1.0920 1.0900 1.0960 40 pips
Day 3 1.0870 1.0890 1.0830 40 pips
Day 4 1.0910 1.0930 1.0870 40 pips
Day 5 1.0950 1.0930 1.0990 40 pips

In this back-testing period, we had three successful trades, one no-trade day, and zero losses. Each trade followed the 2:1 risk-reward ratio, leading to substantial weekly profits.

Practical Tips for Success

Stay Disciplined

The key to success with this strategy is discipline. Always follow the outlined steps and avoid deviating from the plan. Emotional trading can lead to significant losses.

Use Proper Risk Management

Risk management is crucial in scalping. Only risk a small percentage of your trading capital on each trade. This approach will protect you from significant losses and help you stay in the game longer.

Quote

“The markets are constantly changing, and the opportunities are endless. Stay disciplined, stick to your strategy, and success will follow.”

Monitor Market Conditions

While this strategy does not require a bias, it is still essential to be aware of the overall market conditions. High volatility periods, such as earnings announcements or economic data releases, can impact the effectiveness of the strategy.

Keep a Trading Journal

Document each trade, including entry and exit points, reasons for taking the trade, and the outcome. This practice will help you identify patterns, strengths, and weaknesses in your trading strategy.

Test Before Live Trading

Before committing real money, back-test the strategy on historical data and practice it on a demo account. This approach will give you confidence and help you fine-tune your execution.

Common Mistakes to Avoid

Overtrading

Scalping requires quick decision-making, but it is crucial to avoid overtrading. Stick to the plan and avoid taking unnecessary trades. Only enter trades that meet all the criteria of the strategy.

Ignoring Stop-Losses

Stop-losses are there to protect your capital. Never ignore them or move them further away in the hope that the trade will turn in your favor. Stick to your initial plan and exit the trade if it hits your stop-loss.

Chasing the Market

Patience is key in scalping. Wait for the retest after the break, and do not chase the market if it moves too quickly. Entering trades without proper confirmation can lead to losses.

Using Incorrect Timeframes

Stick to the timeframes specified in the strategy (1-minute, 5-minute, or 15-minute). Using different timeframes can lead to inconsistent results and affect the strategy’s effectiveness.

Not Adapting to Market Conditions

While the strategy is designed to be simple, it is essential to adapt to changing market conditions. If the market is extremely volatile or choppy, consider sitting out and waiting for better opportunities.

Advanced Tips for Enhanced Performance

Combine with Other Indicators

While the strategy does not require any additional indicators, combining it with other technical analysis tools can improve your success rate. Consider using moving averages, RSI, MACD or any other custom indicator to identify potential entry points and confirm trends.

Utilize Key Levels

In addition to the opening range, pay attention to key levels such as support and resistance, previous day highs and lows, and pivot points. These levels can provide additional confluence and improve the accuracy of your trades.

Manage Trades Actively

Once you enter a trade, manage it actively. If the price moves significantly in your favor, consider moving your stop-loss to break even or trailing it to lock in profits. This approach can help you maximize gains and minimize losses.

Quote

“Success in trading comes from a combination of strategy, discipline, and continuous learning. Keep refining your approach, and never stop improving.”

Develop a Routine

Create a daily routine that includes pre-market analysis, executing the strategy, and reviewing your trades. Consistency in your routine will help you stay focused and improve your performance over time.

Stay Updated with Market News

While the strategy does not require a bias, staying informed about market news and events can help you anticipate potential volatility and make better trading decisions.

Conclusion

The Opening Range Break and Retest Strategy is a simple yet effective scalping technique that can help you make consistent profits in the market. By following the outlined steps, staying disciplined, and practicing proper risk management, you can increase your chances of success. Remember to back-test the strategy, keep a trading journal, and continuously refine your approach. With patience and dedication, this strategy can be a valuable addition to your trading arsenal.

Final Thoughts

  • Stay Disciplined: Stick to the plan and avoid emotional trading.
  • Risk Management: Protect your capital by using proper risk management techniques.
  • Continuous Improvement: Keep learning and refining your strategy to adapt to changing market conditions.

By implementing the Opening Range Break and Retest Strategy on EUR/USD or any other trading pair, you can enhance your trading performance and work towards achieving your financial goals. Happy trading!

Simeon Bala
Author: Simeon Bala

An Information technology (IT) professional who is passionate about technology and building Inspiring the company’s people to love development, innovations, and client support through technology. With expertise in Quality/Process improvement and management, Risk Management. An outstanding customer service and management skills in resolving technical issues and educating end-users. An excellent team player making significant contributions to the team, and individual success, and mentoring. Background also includes experience with Virtualization, Cyber security and vulnerability assessment, Business intelligence, Search Engine Optimization, brand promotion, copywriting, strategic digital and social media marketing, computer networking, and software testing. Also keen about the financial, stock, and crypto market. With knowledge of technical analysis, value investing, and keep improving myself in all finance market spaces. Pioneer of the following platforms were I research and write on relevant topics. 1. https://publicopinion.org.ng 2. https://getdeals.com.ng 3. https://tradea.com.ng 4. https://9jaoncloud.com.ng Simeon Bala is an excellent problem solver with strong communication and interpersonal skills.

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Simeon Bala
An Information technology (IT) professional who is passionate about technology and building Inspiring the company’s people to love development, innovations, and client support through technology. With expertise in Quality/Process improvement and management, Risk Management. An outstanding customer service and management skills in resolving technical issues and educating end-users. An excellent team player making significant contributions to the team, and individual success, and mentoring. Background also includes experience with Virtualization, Cyber security and vulnerability assessment, Business intelligence, Search Engine Optimization, brand promotion, copywriting, strategic digital and social media marketing, computer networking, and software testing. Also keen about the financial, stock, and crypto market. With knowledge of technical analysis, value investing, and keep improving myself in all finance market spaces. Pioneer of the following platforms were I research and write on relevant topics. 1. https://publicopinion.org.ng 2. https://getdeals.com.ng 3. https://tradea.com.ng 4. https://9jaoncloud.com.ng Simeon Bala is an excellent problem solver with strong communication and interpersonal skills.