Transcription
One of the most popular trading strategies on the internet right now is hands down the ORB, opening range breakout. I have seen it called everything from first candle strategy to using it as a one-minute entry model, 5-minute, 15-minute, the list goes on. There's so many different variations of it, so many different names for it. The box theory, you know, new fancy names come up for the same strategy all the time. And our job here at the PT Investor is just to give you the simple basics of strategies that work, but also to show you the history. So that's one thing we're really going to focus a lot on this year is every single thing we teach on this channel. We're going to make sure to give credit where credit is due. Many of these trading strategies have been around for decades and decades. We did not invent them. Nobody on the internet probably invented them because they probably weren't even born yet. And we just want to make sure you know who did and we give credit where it's due.
Now, don't get me wrong, in today's trading world, there are tons of algorithms involved. The markets are different than they were in, let's say, the 1990s. And so, there are ways that you can tweak these strategies like the ORB to make them more efficient in today's markets. And that's exactly what we're going to go over in today's lesson. Not only I'm going to teach you guys the traditional way it's taught, you're going to hear me say the word "traditional" a lot, but I'm also going to break down why we don't trade the traditional model at Peachy and what we do instead. So, we'll go over, like I said, the history lesson, where it originated from. We will also go over common entry model mistakes. So, there is a ton of mistakes I see newbies making when trading this model. I am also going to cover how you can potentially increase your win rate and or get a better risk versus reward. So there is a big argument in the trading world, which one matters more, risk versus reward or win rate? For me, I group these all together because the quality of the trade is what matters most to me and that means I'm not going to focus on taking a ton of trades, rather waiting for trades that have a better risk versus reward. And so I would rather wait for that and get a lower risk, higher reward scenario than just entering every single time I see the model come about or even potentially start to form a trade. So we will help you understand how to be more picky and what to look for to get better trades, better quality trades without risk versus reward. And then at the end, if you stick around, I'll make sure to go over trade examples and give you guys a plan of action. So after this video, you can go into the next trading session fully understanding not only how to trade ORB, but how to trade it better than anyone on the internet is potentially teaching you. Because I've seen a lot of videos on ORB. I've studied a lot of different teachers teaching ORB. And I want to make sure that I give you guys the simplest, easy way to execute on it that's actually going to give you results when done right over time. So with that being said, before we dive into today's lesson, make sure you check the description box down below. We have a free investor newsletter. So, if you work a full-time job and you feel like you have trouble staying in the loop on everything going on between earning season coming up, economic calendar events, CPI data, what's going on with big names in the market, just everything you need to know, this whole oil Venezuela thing, how it can affect XYZ stocks and oil. We make sure to cover all of that weekly for free for you guys. So, check the description box down below to sign up. And with that being said, let's dive right in.
So before we even talk about who invented ORB, let's just go over the basics of what ORB is. So let's break down that name. Opening range breakout, right? So you have a range. If you have done any sort of trading, you know when price is stuck in a range, right? You can clearly see the range price is stuck in. So that's the first piece to the puzzle. You have price ranging, right? The next piece to the puzzle is you are looking for what? Opening range breakout. So that means if you are looking bullish, then you are looking to the upside. That means if you are looking bearish, you are looking to the downside. Okay. So we're looking for a breakout of a range. And the first part of this is what? Open. Okay. So what does that stand for? Market open. What time does market open? 9:30 a.m. Eastern. So this is a specific strategy geared towards looking for a breakout of the opening range. Again, 9:30 a.m. Eastern. And I've seen it taught everywhere from the first five-minute candle. So that's oftentimes where you will see people refer to it on YouTube as the first candle strategy, first candle scalping strategy. And usually when you are on something like a five-minute candle, they are then moving down to a one-minute to scalp. Okay. So right off the bat, I do want to highlight if you're having trouble with ORB, really analyze what type of ORB model are you trading. If you're trying to trade a one-minute entry model off of a five-minute candle and you can't even master a five-minute candle or maybe a 105-minute time frame, then in my opinion, this is going to be way too fast for you. This is advanced stuff, right? I've also seen people teach it the traditional way, which is usually the 15-minute candles, that first 15-minute range, and instead of a one-minute candle closing above or below, they are usually looking for a five-minute candle. So, we will go over this in more detail, but before we started with the history, I just want to make sure you understand what ORB is and what the model looks like and then we'll dive into the history because this will make more sense when we talk about who actually laid the foundation for ORB to be created.
All right, so new fancy names, same OG trading strategies. This means that at the core of what most people are teaching on the internet, it can be called different things, but the reality is it's ORB. Okay, first candle strategy, box theory, whatever they're saying, at the core of it, it is ORB. Okay, so there's no need for a new fancy name. And also, the funny thing is, if someone claims to have invented ORB, I would really challenge them to go back in history because that's not accurate, and we want to make sure we're giving credit where it's due. And I thoroughly enjoy looking up the history of where this all started. Day trading became super popular in the past, you know, couple years. I would say really after COVID, day trading started to take a huge jump in popularity. But the reality is day trading has been around for decades and decades. It's been around for a really, really long time. And so that brings me to who laid the foundation for ORB to really take shape and that is Arthur Merrill. He did not invent ORB, but his studies and research which was on price patterns. So price patterns, aka technical analysis. This was in the 1950s to 1970s. So long before I was even born, and I'm pretty sure most of the people watching this weren't born and or you were babies. So this is when he started to develop, you know, research, he was understanding behavior of prices on Wall Street and he was really into studying these three things right here: breakouts, ranges, and expansions. So what did we talk about with ORB? ORB is a range that we are looking for a breakout on. So in order for ORB to even be invented, we first had to understand what breakouts and ranges were to then develop the basis that ORB was created on. So Arthur Merrill, this guy right here, I would say, oops, I would say played a huge part in ORB being created. And again, he started studying this stuff in the 1950s to 1970s.
All right. Now, we're going to talk about the guy who I will give credit where it's due and say that he actually invented ORB. Now, a lot of people on the internet will say that he did not invent it because it was not invented by a single person. It evolved organically from professional floor traders. So a lot of what we teach, we will say that our strategy is TFC-based, trading floor concepts, because we teach raw price action, which has been around since the trading floor days, long before, you know, YouTube, long before people were talking about trading strategies on the internet. We teach the OG stuff that has proven to work in any market conditions. So, we will give credit to Toby, even though some people on the internet said it wasn't necessarily him that created it, but he is the one who actually wrote a book about it. Okay, so Toby Crabel, this guy right here, he was a professional trader and author and he wrote "Day Trading with Short-Term Price Patterns and Opening Range Breakout." Okay, and what does this say? 1990. So, if someone on the internet says I invented ORB, they're lying. Toby Crabel invented ORB because he wrote a book about it in 1990, before most of us were even born or writing or talking. Okay? So he systematically defined the opening range, which again can be anywhere between 5 to 30 minutes. The longer you wait, the more data you have, and in my opinion, we are very favorable on the 30-minute mark, but we do take into consideration 15-minute. The five-minute, in my opinion, is not enough data to do anything other than scalping very quickly off of, which I'm not a huge fan of teaching because most of you cannot even be successful on a five-minute. This is where you're looking for breakouts above or below that range. Now, remember, we're just looking for a range. So, price is ranging at market open. Okay? And then you're looking for a breakout above or below that range. Volatility expansion and time-based market behavior. The most volume occurs at the beginning of market open. Okay? That's why ORB was created is because if the most volume is happening at the beginning, aka open, market open, then that breakout of that range will be the most significant breakout of the day, usually, and tell you a lot about direction for the rest of the day.
All right, now that you guys know the history of ORB and where it originated, and again, in the 1970s, we have Arthur Merrill laying the foundation, 1990s, we have that Toby Crabel guy who actually wrote a book about it. So we're going to give credit to those guys. Now, let's move into the traditional way it's taught, as well as common entry model mistakes. So, why do I most oftentimes see traders using this strategy fail? I have a ton of data. PT Investor has taught over 6,000 students, and a lot of them would come in trading something like the ORB model and just they were not successful. But there are specific reasons to why they were not successful that we're going to go over. And then we'll move into how to get better quality trades with it. Aka, we are really focused on that risk versus reward. Getting a better risk versus reward will give you higher quality trades, aka bigger winners, smaller losers. And then trade examples and plan of action. And remember, if you stick around to the end, we will go over your exact plan of action, as well as how you can use this with actual trade examples, going over where the risk management would have been, entry, all of that good stuff.
All right, so we're going to draw this manually together and go over the traditional model, common mistakes, and then we'll move into some things that you can do to really make it a higher quality model in today's markets and get faked out less. So, let's go to horizontal line and let's just start by drawing the normal ORB, which is the first 15 minutes. The most common way it's taught is the 15-minute opening range, meaning from 9:30 a.m. Eastern to 9:45 a.m. Eastern. You can do this by doing the 15-minute candles and just drawing the high and the low. That's probably the easiest. But since I trade off of a five-minute candle, I'm going to stay on the five-minute time frame. And this means I need to mark the first three five-minute candles, which equals a 15-minute range. Okay, just so you know, I'm not cherry-picking. This is today's price action. Since we are still earlier in the morning, I'm not going to do this one. I'm going to do a day that's already played out because we need to draw the entire range. So, we're just going to go to yesterday. Not cherry-picking here, just going to do this together. And right here, my colors are preventing me from clearly seeing after hours. There we go. So right here would be market open on Thursday the 15th. Today is Friday the 16th. So since I am on a five-minute candle, I'm going to mark the high and the low range of the first three five-minute candles, which equals 15 minutes. All right, this is the high right in here. And then we're going to take this one and mark the low, which is right in here. So you've got 5, 10, 15. Okay, first three five-minute candles, you've got the high and the low of that range, and that creates the range that you're going to look for a breakout on. Now, that is the traditional way it's taught. Again, I'm sorry if I'm saying the word "traditional" a million times. It's really important for you to understand because when I'm teaching the model that we use, it's not the traditional model. And so just know that at first I'm going to teach you the normal way it's taught and then towards the end of the video we will start to cover the way that we use it at Peachy and the way that we have backtested it tons. We have three different coaches on the team that have done nothing but backtest for months and months. Tons of data because we are only going to give you actionable strategies that are proven to work based on data, not based on guessing. So the normal way it's taught is what you're doing is waiting for a breakout of this range. So for example, you might see this right off the bat and again, I'm not cherry-picking. This is and this is yesterday. You will see that it's very easy to get faked out. Why? Because when we break out of this range, aka a candle closing below, what did we do? We immediately went back up. So if you're looking for a short, once we have a candle close below, you would have gotten stopped out and lost money. Same thing. We came above and we had candles closing above right here. So, let me there. I want to get my cross so you can clearly see what we're doing here. So, right in here, you see how candles closed above, right? You might have gotten a nice little scalp, but still the risk versus reward that you would be having in a little trade like this just isn't worth the amount of times you're going to get chopped out. So, the normal way it's taught, you're waiting for a candle to close below for shorts. You're waiting for a candle to close above the range for longs. Like I said, many traders, I will say, teach it using one-minute candles, not five-minute candles. And they're on much smaller time frames. So, let's actually scale down and see if one-minute candles would have gotten you a better trade. So, one-minute candle closed below here, you could have looked short, you would have gotten stopped out. Some people put their stops, I'm not kidding you, some people, you trade this model and have their stops on the opposite side of ORB. Now, I don't care how new you are as a trader. Please tell me. I hope you're saying to yourself, "Wow, that is really bad risk-risk reward." Because it is. If you are taking shorts all the way down here and your risk is all the way up here, that's a really bad risk versus risk reward. And more times than not, you're going to lose a ton of money. Now, some people who teach it will teach that once you break below ORB, you're risking either the 50% mark of ORB, which we'll cover in just a minute. I don't mind that. That's obviously much better than the high of ORB, and or risking the candle high that broke ORB. So, for example, if this candle broke ORB, then they're risking this candle high and then looking for continuation down. So, you can see faked out once, faked out twice. We came up here, you would have probably gotten faked out. Came back down here, you would have gotten faked out again. But one thing I do want you to notice, do you notice how maybe if you were understanding that normally retail traders are using ORB in that way, that you could have used that to your advantage? A lot of traders do that. So many of them are actually just scalping from the low to high to ORB and taking fake outs. So that's one way that you could alter the way you're trading ORB. If you're very good at scalping on the one-minute, you can look for those fake outs. That's one of my favorite ways to actually trade ORB is to take reversals when we fail to hold above or below. So in this case, you can see we came down. We attempted to close below. We did close below, but then we immediately closed back above and then you can trade it to the top of ORB. Same thing here. We had a failure to hold above. We closed back into ORB. You could have traded it back down to the bottom of ORB. So many of them are just scalping high to low, especially on consolidation days.
One tip I'm going to give you guys right off the bat that is super helpful when you are looking to avoid choppy days or understand if we're going to have a trending or choppy day. I taught this lesson in the group and they really, really loved it. It really helped them click is if we are in ORB, which is usually the first 15 minutes, that's the way most people uh teach it. And let's say the first 15 minutes pass and we're attempting to break out, but we're still in ORB range. Your best trending days are around 15 to 30 minutes, we are breaking out of ORB and seeing true trend develop, right? So this would be an indication of range like a ranging day. If we are passing the 15-minute to 30-minute ORB and we are still within the ORB range. If we're still within opening range after let's say 40 minutes of market open, you are more likely that day to see a range-based day. After 40 minutes to an hour of market open, if we're clearly holding outside or above opening range, then that's more of your trending day. Why? Because we've broken out of range. If we're still within that range and trading within it after, you know, let's say 40 minutes around, um, I would say 10:15 to 10:30. If you're not seeing 10:15 to 10:30 a breakout of that range, then it's more likely to be a range-based day. And you can then look for just base hits from bottom to top of the ORB range. And that's one model that you could trade. So we actually have a team of AI coders on Peachy that are traders but also have tons of experience with coding with their normal jobs. And they did an awesome thing and created our own ORB indicators. So I'm going to bring those on so we don't have to manually do this anymore. We have an ORB indicator that's specific to the way that we trade it for indices, which that would be SPY, QQQ if you're an options trader. We mainly use ORB and we mainly day trade with futures, but you could also do options. Um, but we also have one for gold, which I'm super excited about. The gold ORB indicator has been one of my favorites to trade, and I haven't seen anyone on the internet really talk about gold ORB, and it is super amazing. So, if you guys are interested more on how to access these custom indicators as well as playbooks with them, and we also have daily lives Monday through Thursday with our coaches to help walk you through how to use it in real-time market analysis. You get one-on-one feedback on your trades. You get tons of education and so much more. Check the description box down below for PT Trading School. But if you guys just want the free stuff, stay tuned. I'm going to keep giving you guys awesome content.
So, let's go to bring up our ORBs. Okay. So, you can see that our box is actually bigger than the traditional 15. I'm going to remove these lines and that is because we use a combination of ORBs. So, we are using the 15-minute. That's the purple defining lines. You can see the high and the low is the 15-minute. Those dark purple lines. The actual box doesn't print until 30 minutes. Okay. The reason for that is because we believe that we would rather people who are normal ORB traders, we would rather them just battle it out for the first 30 minutes. And then usually that's where a lot of the fake outs are coming from, right? Those 15-minute ORB traders getting faked out, the scalpers scalping from high to low of ORB. All of that can create a lot of messy price action. So, we like to wait for the larger point of view direction at around 10:00 a.m. Eastern or after. So, we prefer 30-minute ORB, but we still take into factor what's happening at the 15-minute to give us an early indication. We also have another ORB, which you can see right here, which is our pre-market ORB, which gives us even earlier indication on potential direction for that day, as well as another area to look for potential discount entries if we revisit it. So in this case, the trade would have been long biased based on pre-market ORB. And you can see how well we reacted, especially with the overlap of our market open ORB, the purple box, as well as our pre-market ORB, this box right here. We had really nice bullish reactions off of it, giving us a really, really, really solid entry if we were patient enough for it to retrace, price to retrace into this ORB. We wait for our bullish reaction candles, which we saw right here. And here. And here. So, there's three different opportunities to trade off of it. And then where would your target be? Remember I told you guys if we're rejecting breaking below ORB, which is what we did here, here, and here, you can then look to trade it to 50%, which is that dotted line we have for our ORB. And then if we break over 50% ORB high. So, notice one thing that I'm leaning on here. We do not trade ORB the normal way it's taught. We are not waiting for breakouts of ORB to trade it. We are instead letting that tell us a story. But one of the best ways that we have seen to trade it is either one, you're waiting for confirmation. Confirmation can look like this. Let's say that you have a failure to break below ORB. That's bullish, right? So confirmation can look like higher low forming, right? That is extra confluence based on price action. You could look for something like a trend line break. So we saw higher support trend line break and then we did what? We moved right up into the top of ORB. There's many ways that you can trade price action and look for confirmation, but just one way is waiting for that confirmation via a higher low or a lower high. So, for example, one way that you can prevent yourself from being faked out is let's say that we are breaking over ORB. Okay, which could be a signal to go long if you're trading it the normal way. We don't do that, but let's say we're breaking over ORB. One thing that you can do is wait for what? If we're breaking over ORB, you could wait for a retest of the top of ORB. And then if we retest, form higher support, and then start to break that prior high right there, that could then be your confirmation. And then you've got a much better risk versus reward because you can risk the high of ORB versus the low. But in this case, what did we do? We broke over ORB. We failed to hold over. We came back in and we formed a lower high, right? So that lower high could then give you the opportunity, a trend line break back to the downside. And then what would your target be? 50% of ORB and ORB low. So, these are simple things you can add in to keep yourself from getting faked out with ORB. Wait for confirmation via higher support or lower highs. Wait to see if we are breaking over ORB or breaking under ORB. That confirmation is super key because more times than not, you're going to get faked out. Especially if you're trading before the 30-minute ORB prints. Fake outs in the 15-minute ORB and trading it from high of ORB to low of ORB is one of my favorite scalping strategies and is very lucrative, especially on days like this.
All right, let's go to another day. Again, not cherry-picking, just going to the day before. We're still on the one-minute here. So, let's see where's market open. Right in here. Okay, so in this case, our pre-market ORB would have gave us a hint that we are bearish biased. Why? Because we closed underneath it, we came back up, failed to hold above it. And so as we moved into 9:45, we are then looking to see what we're looking to see how does that one print. What is price action doing? Are we closing above or below? And these are all telling us stories or hints for a story on potential trend that day. So we've already got a nice move down. As we move into 9:45, we try and attempt to bounce and then we start to come back down. Now remember, the 30-minute ORB hasn't printed yet. So we are just taking the 15-minute into consideration, but for true trend that day, we want to see the 30-minute ORB print. And I did mention we have a gold ORB. Just know that gold has different times for market open. So it's not 9:30 a.m. Eastern. So that's why we have separate ORBs for indices versus gold because gold's going to have a different market open. Okay. So per the normal strategy of 15 minutes, you would have been waiting for a candle to close below. So, right into 9:45, we saw a potential to reclaim that ORB. We came back in to probably 50% if I had to guess. We had a nice doji and then we started to trend back down. We finally had a close below at around 9:58 into 10:00. Remember, we're on the one-minute candles. So, if you are good at scalping, that could have been a really nice, you know, three-minute scalp down. Now for us, we really love to wait for those larger moves that are going to have the smaller risk but a larger potential reward. So we don't love the one-minute, but it is helpful to see reactions. Again, we usually trade on a five-minute or potentially two or three-minute just depending on price action that week and if we are consolidating or trending. The larger point of view market analysis is also really key and important for us. We have KPLs that we also take into factor. Put a couple of screenshots up right now that you can see. Not only were we using the ORB model, but when it's in confluence with something else like rejecting a KPL, for example, that is really super important for us. And that is a higher probability trade, meaning we will go heavier in size when we see something like a KPL rejection and or support forming off of our KPLs. And if we can combine that with the ORB model also confirming direction, that is our more of our A+ trade setups.
Okay, so now we have 50% of ORB, this dotted line right here near 690 on SPY. And again, we usually trade ES for futures, but I have SPY up because I know some of you might be trading options and be more familiar with SPY. ES and SPY are the same thing. ES is the futures version, and then SPY is obviously going to be what you could potentially trade options on. So we have about 50% market 690. Okay. So once this ORB printed, we had a retrace back into ORB. We attempted to close over 50%. Again, these are one-minute candles. For me, I would now want to switch to five-minute because I'm really trying to grasp the larger move and I don't want one-minute candles to confuse me. Now that we're on five-minute candles, to me, this is just much better and cleaner. You're less likely to get faked out. If you're on one-minute candles, then you are really just gauging a three-minute move on average probably. For me with the five-minute candles, it allows me to catch that larger move, which means I will take less trades, but that's what I prefer. Okay, so now you can see as we came into 10:00, we had already had the initial move down. So, what does that tell me? If we've already had a leg down and I'm thinking that we're bearish on the day, what do I want to wait for? Confirmation. What is confirmation? Basic market structure, guys. A lower high, right? Where would I prefer my entry be? If I am looking to trade in an ORB and the ORB range is really large, 50% of ORB would be a great entry point, especially if we're rejecting and failing to hold above. That's exactly what we did here, right? We closed below. So, you could risk right here above this lower high and then you can enter somewhere in here or on this candle printing. And then your first target is what? ORB below. The next thing you want to see is what? Closing below ORB and that was a super nice continuation. If you missed this, we revisited and rejected. What this is why we have the 15-minute ORB. Also, those dark purple lines. We came back up and perfectly rejected that 15-minute ORB low, which could have been another potential entry if you missed all of this. So, all of the ORBs work together to tell us a story. We are not entering or waiting above or below. We are just analyzing price action and how it reacts at each ORB. We have the pre-market one to give us early indication, which would have been a great thing to have on your chart that day. And we also love to see confirmation via a lower high or higher low. This was a perfect example of waiting for that confirmation via just understanding basic price action and where discount zones would be. This gives you a much better risk versus reward versus the normal trading model, which is you're waiting to enter all the way down here and you would be in way too much drawdown, especially if you're doing something like trading a prop firm.
And it's a perfect time to introduce our sponsor on this channel, which is Tradeify. That is our preferred prop firm. We really like them because they don't have an opening trailing drawdown like some of the other firms. Your drawdown is at the end of the day. Their accounts are also really cool because they have options where if you want to skip the evaluation process, you can go straight to funded with their lightning accounts. They have different options between growth and select, which is their newer ones. With the select accounts, you have the option to choose daily or flex for your payouts. They just have amazing rules. And in my opinion, if you're trading something like futures, why risk your own money when you can spend, let's say there's no activation fees. So that's something else you need to understand. With other accounts, they might be cheaper upfront, but then you're paying an activation fee if you pass your evaluation. So let's say that you go growth, which you can start getting funding in one day. Their accounts when they're on sale are usually about $97 all in. So you're paying $97 to get, um, potential trail max drawdown of $2,000. So you're buying $2,000 of risk with only $97. And Tradeify is definitely our preferred prop firm in the industry. They have trading journals so you can track your trades and not have to spend extra on that. Overall, really, really love them. If you guys are interested in signing up, make sure you use the code PEACHY. That will get you the best discount at that time. And I know a lot of you guys are probably going to be asking, so if you would like me to do more content on the gold ORBs that we use and how you can use ORB to trade gold, not only in the morning, but also potentially trade in the nighttime sessions. One of our coaches, Kith, he mainly trades, he's gotten like $30, $40,000 in payouts in his first three months of trading, which is wild. Uh, he mainly trades gold at night. And so there's not only ORBs to trade gold in the morning, but there's also nighttime session ORBs, which I guess you can say just the open would be nighttime open, right? But there is so many ways that you can incorporate the ORB model into trading more things than just the traditional way. So gold would definitely be probably my favorite. I love it. I think it's super underrated and the model is extremely accurate. So if you guys want more content on that, let me know down in the comments. I will probably be posting some content over the next week or two on our Instagram when it comes to gold. So, make sure you guys are following us if you haven't already. Please do not fall for scammers. We only have that one Instagram account for PT Investor. And any Instagram account or social media account will be linked in the description box down below. We will never DM you. That is a scammer. Please block and report them. But with that being said, thank you guys so much for watching. Again, if you want more on PT Trading School, more one-on-one support, the paid stuff is going to be in PT Trading School where we provide a ton of value and our coaches are there to help support you along the way. If you want more free stuff, make sure you are subscribed to the YouTube channel. We will be posting way more content in 2026 and we're going to bring more of the team of Peachy Investor alongside of me to help make content as well. So, that'll be exciting. Uh, yeah, that's a wrap for today. Thank you guys so much for watching. Make sure to hit the thumbs up button and I will see you next.