What is “Early Morning Trader”?
Every day in our other site ZERODHA CLUB, we post list of some scrips that has moved extreme rangebound today. We tag these scrips as “Explosive Scrips for Tomorrow”. There is a specific rule of trading these scrips. This rule is called “Early Morning Trader”.
Now lets see one example. Suppose we noticed BAJFINANCE as an explosive scrip for 29th April 2016 in our post at our other site ZERODHA CLUB. Read similar post here.
Now lets see how to trade this. We will open ZERODHA KITE. Lets login with our id and password. Open BAJFINANCE chart. Switch to 15 minutes time frame.
Now lets draw 2 horizontal lines at the high and low of first 30 minutes high or low. We define this as our Opening Range (OR) and we will trade Opening Range Break (ORB). Now lets wait for a 15 minutes candle to break and close above or below the ORB. On this day ORB breaks on the lower side.
How to keep SL in trading Opening Range Breakout?
Lets calculate the Opening Range, i.e. gap between the high and low of the opening range. As this day it breaks opening range on the lower side, we will trade short, SL will be opening range high. For long trades, in case of opening range breaks on the upper side we must keep SL below the opening range low.
How to decide target in ORB trading?
Target can be calculated as a multipler of the opening range, i.e, 1 X OPENING RANGE OR 1.5 X OPENING RANGE OR 2 X OPENING RANGE. The lower the target the chance of hitting the target is more. You may do some trial and error on deciding the target and send us a mail. Contact us with your queries here.