Tony Crabel's Opening Range Formula

[codrut_8]

This information is available in Toby Crabel's, "Day Trading With Short Term Price Patterns and Opening Range Breakout". This is a mathematical formula used to play the opening range breakout. This was a famous opening break method amongst the professionals for many years. A lot of traders still use this method.

 

First Step: you get the (High - Open) and the (Open - Low)

 

For example: Let's take the S&P 500 emini contract

 

High: 1294

Low: 1281.5

Open: 1290.50

 

(High - Open) = 3.5

(Open - Low) = 9

 

2nd Step: You take the minimum of the two numbers. In this example the minimum would be 3.5.

 

3rd Step: Add the minimum for the last 10 trading days and divide it by 10. So you would add 3.5 to the minimum of the previous 9 days. In total you will have 10 numbers. Divide that by 10 to get the average.

 

4th Step: For example, let's say you get a 10 day average of 2.5. You simply play the breakout of the opening range. If prices open up at 1293, you would buy a breakout above 1295.5 and short a breakdown below 1290.50.

 

It works well on stocks, ETFs, indexes, futures, forex.

Beware, this is not a complete system, you’ve got to have an exit strategy.

 

MT4 indicator does the calculation for you:

hxxp://[email protected]/account/dir/sUUpQZT6/sharing.html?rnd=99

Edited August 20, 2010 by codrut_8

[zizi101]

THX! - the correct name is Toby Crabel