How To Trade Opening Range Breaks (ORB) with Trade Unafraid

 There are many ways to trade Opening Range Breaks (ORB) with Trade Unafraid.

On August 16th, trading TSLA on the break of the 5min ORB would have resulted in a very solid trade. Let's go over how to configure this setup with Trade Unafraid. In this TSLA trade, we will look to go short on the break of the Opening Range low. 

TSLA ORB short on August 16th

The first thing to do is select the trade direction as Short. With Trade Unafraid, you can select long and short at the same time, and take whichever occurs first. If the Opening Range high breaks first, Trade Unafraid would enter long. If the Opening Range low breaks first, Trade Unafraid would enter short. On this day, I had a short bias, so I set trade direction only to Short.

Next, I entered TSLA as the symbol. In this screenshot (above), I have chosen to trade the nearest expiration options, where I have selected "front" expiration Puts. More on that in the next image...

I then selected the instrument. You can choose either stock or option. A powerful capability of Trade Unafraid is that you can automate option selection, and it can dynamically select based on your criteria at the time of entry, which could be hours after the creation of the trade plan.

In this trade plan, I have enabled the entire front-expiration option chain and configured it to choose the option with the tightest spread.

On the right side of the form are two option filters configured first to only allow an option with a 5% spread or better, and second to select an option that will result in a quantity of contracts from 2 to 5, taking into account the dollars allocated to the trade (see below). If no options are found which meet these criteria, then the trade will not be taken. This keeps you out of unfavorable trades or unfavorable instruments.

Next, I configured the setup. I have selected ORB and chosen a candle duration of 5 minutes. Once the 5-minute Opening Range has been established, Trade Unafraid will set triggers to enter at the top and bottom of that range. Of course, you are free to choose any duration you prefer for the Opening Range.

Lastly, I selected an entry tactic. Here, I have selected a market order and have specified a trade size of $2500. The number of contracts will be between 2 and 5 as specified earlier (meaning an option price from 5.00 to 12.5), choosing the option with the tightest spread, and only if the spread does not exceed 5% of the option price.

BONUS:

Sometimes, it might be beneficial to add a little more confirmation along with an ORB. Sometimes you will see price break the Opening Range and never look back, as can be seen in the chart below.

FB August 16th

With Trade Unafraid, you can have the system enter upon the occurrence of specific candle sequences. This setup is very useful if you trade The Strat. What I'll show next is how to configure a trade plan that will enter on the break of the low of an inside bar (1-2d) below the Opening Range or on any candle sequence with the break of the prior high followed by the break of the prior low (2u-2d). In this case, I am looking only at 5-minute candles.

In the image above, I have selected the Candle Pattern setup. This setup can watch for multiple patterns at the same time (bottom rows in the image). Each row represents a different candle pattern, and additional patterns can be added with the green plus sign. Any row can be deleted with the blue circled X.

With my setup configured, I then created a setup filter called "Price intersects first candle". Because I am trading based on the 5-minute Opening Range, I typed in 5 to base the filter on the first 5-minute candle of the day. To complete the setup filter configuration I select BELOW and LOW. With this configuration, Trade Unafraid will only enter the 1-2d or 2u-2d setup if the current price is below the low of that opening 5-minute candle.

Putting this all together, I am saying to only enter a trade if I have a 1-2d or a 2u-2d pattern that occurs below the Opening Range low, which is the low of the first 5-minute candle.

Lastly, I set the trade plan to be "Repeating." This tells the trade plan to keep setting up over and over again, each time a trade has been closed or filtered out. If Repeating is not checked, then a setup that triggers but does not pass the setup filter will not be taken, and the trade plan will terminate. With Repeating checked, rather than terminating the trade plan after the setup filters out, Trade Unafraid will instead start looking again for a new setup.

There are a number of Restart configurations to choose from. For example, maybe you only want to take the first two setups that occur during the day. Setting max trades to 2 would allow this.