Scalping Strategy: Opening Range Break and Retest

Jul 1, 2024

Scalping Strategy: Opening Range Break and Retest

Overview

  • A simple and beginner-friendly scalping strategy.
  • Can be used daily for consistent profits within the first few market hours.
  • No need for market bias—works regardless of market direction.
  • Most setups form between 9:30 to 11:00 AM.
  • Mechanical strategy with clear stop and profit targets.

Strategy Explanation

Key Points

  1. No Bias Required: No need to guess market direction.
  2. Time-Efficient: Setups occur shortly after market open.
  3. Beginner Friendly: Mechanical and easy to execute.

Strategy Breakdown

  • Opening Range Break and Retest
    • Opening Range: Mark the high and low of the first 1-minute or 5-minute candle.
    • Wait for Displacement: Look for a strong breakout (displacement) above or below the opening range.
    • Retest: Wait for price to retest the broken range (either high or low).
    • Entry & Stops: Enter on the retest with stops set above/below the opening range.
    • Target: Aim for a 2:1 risk-reward ratio.

Example Steps

  1. Mark Opening Range: Identify high and low of the first 5-minute candle.
  2. Identify Breakout: Wait for a strong displacement.
    • Example: Bearish candle closes below the range with significant displacement.
  3. Wait for Retest: Price retests the broken range (e.g., retests the opening range low).
  4. Enter Trade: Enter after retest with stops above the high/low.
    • Example: Short position taken at the retest of the range low.
  5. Set Target: Target a 2:1 risk-reward ratio.

Visual Examples

  • Upside Trade

    • Mark out opening range high and low.
    • Wait for a break with strong displacement above range high.
    • Wait for a retest of range high.
    • Enter long with stops below range low and target 2:1 ratio.

  • Downside Trade

    • Mark out opening range high and low.
    • Wait for a break with strong displacement below range low.
    • Wait for a retest of range low.
    • Enter short with stops above range high and target 2:1 ratio.

Backtesting Results

Week 1

  1. Day 1: No trade (setup didn't materialize).
  2. Day 2: Successful trade, 2:1 risk-reward achieved.
  3. Day 3: Successful trade, 2:1 risk-reward achieved.
  4. Day 4: Successful trade, 2:1 risk-reward achieved.
  • Overall: Three wins, one no-trade, zero losses.
  • Net Result: +6R for the week.

Additional Considerations

  • Scaling Profits: Consider taking profits at significant levels (e.g., pre-market low) and trailing the rest.
  • Adjusting Strategy: Different trades might require adjustments to risk-reward targets (e.g., key levels). Overall goal remains an average 2:1 risk-reward ratio.

Conclusion

  • The opening range break and retest strategy offers a high probability setup that’s easy to execute and manage.
  • Key Factors: Patience, waiting for proper setup and retest, clear mechanical rules.
  • Next Steps: Backtest the strategy yourself and refine based on results.

Closing

  • Encourage viewers to backtest and share their experiences.
  • Reminder to like, subscribe, and comment with results.
  • Outro: "See you next week, peace!"