The Opening Range (OR) Trade

The OR is the range of the first 1 minute bar when the markets open. At the time of writing this it is the range formed between 09:30:00 and 09:30:59 EST (inclusive) for the S&P 500 (SP) and the E-mini Russell 2000 (ER2). When trading the E-mini S&P 500 we use the OR for the big contract (SP) to base our OR trades. For the bonds (ZB) the OR is formed between 08:20:00 and 08:20:59 EST. Other E-mini and mini sized contracts such as NQ and YM follow the pattern of the ER2.

The OR trade is taken when the market opens outside the Value Area (VA) by more than 3 handles in the ES/SP and is taken in the direction of the VA. If we open above the VA then we short and if we open below the VA then we go long.

We try and enter the OR trade at the most favorable price which is at the high of the OR for short trades and the low of the OR for long trades. This is our Entry Target.

In the SP, JP will try to enter as much as 1 handle outside of the OR as he is able to if he enters at the extreme of the OR and the price goes beyond the OR. He will MacGyver the price as far out as 1 handle from the OR. This is what JP sometimes does - this is not advice to do the same.

We use a stop of around 1.5 handles from the Entry Target for the equity indices that we trade and a 3 tick stop for bonds.

One of our Exit Targets (often the first Exit Target) is the Value Area High or Low (VAH/VAL) which is an obstacle. (The VAH/VAL are obstacles because these are basic Market Profile trades in the opposite direction when approached from outside the VA. See Basic Trades.)

The OR trade Entry Target to VA needs to be multiple handles because we do not risk 1.5 handles for less than multiple handle targets.