Opening Range Breakouts Confirmed by Fair Value Gaps

Summary

This intraday method combines an opening range breakout with fair value gap signals. It defines a range from the early session, typically the first five minutes, then looks for bullish or bearish gaps that intersect the corresponding range boundary as confirmation for a breakout entry. The described setup places stops at the prior candle's low or high and sets a profit target using a risk-reward multiple. Position size is calculated from the stop distance and a fixed fraction of account capital, and open positions are closed at the session end.

The document focuses on US regular trading hours and describes configurable session windows, risk settings, multiple positions, and chart annotations. It does not provide backtest results or evidence that the setup has predictive value. Its caveats include sensitivity to session and risk parameters, potentially false breakouts in quiet conditions, market-specific behavior, and execution slippage. Volatility-adjusted ranges and stops, volume or trend confirmation, and partial exits are suggested for further investigation.

Key ideas

• The opening range is defined from the early trading session, and its boundary break is paired with an intersecting fair value gap.
• Stops are placed at the prior candle extreme, and the profit target is based on a risk-reward ratio.
• Position size varies with stop distance to target a consistent account risk per trade.
• Positions are closed at the end of the trading session to avoid overnight exposure.
• The document gives no performance results and warns that market conditions and execution can affect outcomes.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.