Pivots, Patterns, and Intraday Swing Trades: Derivatives Analysis with the E-mini and Russell Futures Contracts, + Website

CHAPTER 2

Opening Range Bar

I know of some very successful day traders who avoid the first hour altogether. I've even heard it referred to it as amateur hour. Perhaps for swing traders and fund managers who hold positions overnight and are trying to avoid being trapped in gap-opening reversals this is true. But for most intraday traders and almost all floor traders, the opposite is actually the case. The 1st Frame is when the professionals trade.

In fact, some of the best traders I have ever met focus almost exclusively on the opening time period, and some even leave the market for the rest of the day after the 1st Frame is over. Considering the hours, it's not a bad life, if you can make it work. With the series of figures and text in this section, I'll examine some of the methods a day trader working from his video screen can employ to capture the earliest trends of the day.

■ ORB Defined

In truth, there is no such thing as the Opening Range Bar (ORB). It's a sort of manufactured item. But there is a thing called the Opening Range. If you've ever listened to a squawk box from the S&P pit, you'll have heard it called out by the pit boss shortly after the NYSE cash opening, just after 9:30 A.M. ET. Orders have piled up overnight and before the actual cash opening so that they can be crossed at a time when there's enough offsetting volume. It usually takes less than a minute for these orders to be offset, but when they finally are, the price range for this initial auction is pegged ...