The Open Range Breakout strategy is a popular trading strategy that uses the high-low range of the first intraday candle to determine an entry point after it is broken.
How to trade using the breakout of the opening range?
A trader should open a buy trade when the price breaks the high of the first candle and a sell trade when the price breaks the low of the first candle.
Initial back test
For backtesting purposes, we coded a full Opening Range Breakout trading strategy as a MetaTrader 4 Expert Advisor. Through preliminary analysis, we determined that the best timeframe for an Opening Range Breakout trading strategy is 1 hour (H1). We retested the opening range breakout strategy. For our test, we used a trailing stop of 30 pips as the exit rule, which is triggered after the start of the trade and changes with each new 1 pip of profit. From our point of view, this approach allows you to maximize profits and minimize drawdown.
We tested on the following timeframe 2009.01.01-2021.01.24 using a per-tick simulation on EURUSD-H1 using 1:11 leverage, no reinvestment, assuming a spread of 10 ticks. These are the main performance parameters of the Open Range Breakout trading strategy in its unoptimized state:
Results of the work:
ROI -5.14%
Number of transactions 3113
Win rate 34.50%
Max. drawdown 61.69%
Trade data analysis
After running an initial test of a simple unfiltered strategy, we analyze trading data to identify possible filters to use to make the strategy more profitable while reducing drawdown.
When using the strategy, the following filters must be taken into account (time sessions, weekday limit, trend strength threshold, overbought / oversold conditions, volatility range) to make this strategy profitable if you decide to use this strategy in your investment portfolio.
Optimization
The Opening Range Breakout trading strategy can be used with other indicators to filter out losing trades and increase the accuracy of entry signals. After analyzing the trading data, we came to the following conclusions, which helped us increase the profitability of the trading strategy for exiting the opening range and reduce its drawdown
Trades that were entered at too low and too high ADX values seemed to generate more losses when trading the Opening Range Breakout trading strategy during 2009-2020. ADX shows the strength of the current trend. It is wiser to enter into transactions at the beginning of a trend.
(ROI increase -5.14% -> -0.6%, drawdown reduction by 61.69% -> 19.48%)
Most of the buy trades that were opened at a too low Stochastic value, and most of the sell trades that were opened at a too high Stochastic value, were unprofitable when trading the Opening Range Breakout trading strategy during 2009-2020. It is risky to make deals in overbought and oversold zones.
(ROI increase -5.14% -> 1.3%, drawdown reduction by 61.69% -> 12.50%)
The most profitable trades were opened at the average value of the demarker when trading “Opening Range Breakout” during 2009-2020. The demarker is aimed at assessing the direction of the market.
(ROI increase -5.14% -> -0.3%, drawdown reduction by 61.69% -> 22.42%)
Optimization results
We analyzed the data obtained from testing the Opening Range Breakout trading strategy during 2009-2019 and applied some filters such as Stochastic, ADX and Demarker. As a result, the profitability of the strategy increased from -5.14% to 5.6%, and its drawdown decreased from 61.69% to 4.58% using 1:1 leverage.
Back test after optimization.
The decrease in drawdown allowed us to increase the leverage that can be used when trading this strategy to 1:35, which in turn resulted in an annualized return on investment of 196.09%!
The decrease in drawdown also allowed us to use risk-based lot calculation.
ROI 17891%
Number of transactions 1060
Win rate 41.42%
Max. drawdown 29.81%
Analyze your trading strategy!
If you have a trading strategy that you want to analyze, optimize and increase its profitability (or even turn it from a losing to a profitable Forex trading strategy) - do not hesitate to contact us! Our trade data analysis team will respond to you within 24 hours with all the necessary details.
User Programming
mt4 programming
Our company specializes in the development of automated trading systems and trading indicators for the most popular trading platforms such as MetaTrader 4/5, NinjaTrader 7/8, TradingView, TradeStation and cTrader.
If you need your own automated trading software designed to your individual requirements, request a free consultation with our team of professional programmers and find out the cost and development time of your project.
Disclaimer: Hypothetical or simulated performance results have certain limitations, unlike real performance, simulated results do not reflect actual trading. In addition, because no transactions have taken place, the results may be under or over offset by the impact, if any, of certain market factors such as lack of liquidity.
Simulated trading programs in general also depend on the fact that they are designed with hindsight in mind. No representation is made that any account will, or is likely to, generate profits or losses similar to those shown.
Past results are not necessarily indicative of future results. The customer is responsible for using the product at his own risk and "Robobroker" is not responsible for any possible damages caused by the use of the product, including, but not limited to, damages.
Ready trading strategies
1 “Breakthrough of the opening range”
is a popular trading strategy that uses the high-low range of the first intraday candle to determine the entry point after it is broken.
How to trade using the breakout of the opening range?
A trader should open a buy trade when the price breaks the high of the first candle and a sell trade when the price breaks the low of the first candle.
Initial back test
For backtesting purposes, we coded a full Opening Range Breakout trading strategy as a MetaTrader 4 Expert Advisor. Through preliminary analysis, we determined that the best timeframe for an Opening Range Breakout trading strategy is 1 hour (H1). We retested the opening range breakout strategy. For our test, we used a trailing stop of 30 pips as the exit rule, which is triggered after the start of the trade and changes with each new 1 pip of profit. From our point of view, this approach allows you to maximize profits and minimize drawdown.
We tested on the following timeframe 2009.01.01-2021.01.24 using a per-tick simulation on EURUSD-H1 using 1:11 leverage, no reinvestment, assuming a spread of 10 ticks. These are the main performance parameters of the Open Range Breakout trading strategy in its unoptimized state:
Results of the work:
ROI -5.14%
Number of transactions 3113
Win rate 34.50%
Max. drawdown 61.69%
Trade data analysis
After running an initial test of a simple unfiltered strategy, we analyze trading data to identify possible filters to use to make the strategy more profitable while reducing drawdown.
When using the strategy, the following filters must be taken into account (time sessions, weekday limit, trend strength threshold, overbought / oversold conditions, volatility range) to make this strategy profitable if you decide to use this strategy in your investment portfolio.
Optimization
The Opening Range Breakout trading strategy can be used with other indicators to filter out losing trades and increase the accuracy of entry signals. After analyzing the trading data, we came to the following conclusions, which helped us increase the profitability of the trading strategy for exiting the opening range and reduce its drawdown
Trades that were entered at too low and too high ADX values seemed to generate more losses when trading the Opening Range Breakout trading strategy during 2009-2020. ADX shows the strength of the current trend. It is wiser to enter into transactions at the beginning of a trend.
(ROI increase -5.14% -> -0.6%, drawdown reduction by 61.69% -> 19.48%)
Most of the buy trades that were opened at a too low Stochastic value, and most of the sell trades that were opened at a too high Stochastic value, were unprofitable when trading the Opening Range Breakout trading strategy during 2009-2020. It is risky to make deals in overbought and oversold zones.
(ROI increase -5.14% -> 1.3%, drawdown reduction by 61.69% -> 12.50%)
The most profitable trades were opened at the average value of the demarker when trading “Opening Range Breakout” during 2009-2020. The demarker is aimed at assessing the direction of the market.
(ROI increase -5.14% -> -0.3%, drawdown reduction by 61.69% -> 22.42%)
Optimization results
We analyzed the data obtained from testing the Opening Range Breakout trading strategy during 2009-2019 and applied some filters such as Stochastic, ADX and Demarker. As a result, the profitability of the strategy increased from -5.14% to 5.6%, and its drawdown decreased from 61.69% to 4.58% using 1:1 leverage.
Back test after optimization.
The decrease in drawdown allowed us to increase the leverage that can be used when trading this strategy to 1:35, which in turn resulted in an annualized return on investment of 196.09%!
The decrease in drawdown also allowed us to use risk-based lot calculation.
ROI 17891%
Number of transactions 1060
Win rate 41.42%
Max. drawdown 29.81%
Analyze your trading strategy!
If you have a trading strategy that you want to analyze, optimize and increase its profitability (or even turn it from a losing to a profitable Forex trading strategy) - do not hesitate to contact us! Our trade data analysis team will respond to you within 24 hours with all the necessary details.
User Programming
mt4 programming
Our company specializes in the development of automated trading systems and trading indicators for the most popular trading platforms such as MetaTrader 4/5, NinjaTrader 7/8, TradingView, TradeStation and cTrader.
If you need your own automated trading software designed to your individual requirements, request a free consultation with our team of professional programmers and find out the cost and development time of your project.
Disclaimer: Hypothetical or simulated performance results have certain limitations, unlike real performance, simulated results do not reflect actual trading. In addition, because no transactions have taken place, the results may be under or over offset by the impact, if any, of certain market factors such as lack of liquidity.
Simulated trading programs in general also depend on the fact that they are designed with hindsight in mind. No representation is made that any account will, or is likely to, generate profits or losses similar to those shown.
Past results are not necessarily indicative of future results. The customer is responsible for using the product at his own risk and "Robobroker" is not responsible for any possible damages caused by the use of the product, including, but not limited to, damages.
