Using the Open High and Low Strategy for Intra-day Trades

Sharing this, tip that is generally applied 30 to 45 minutes after market opens.

To see open high low you can search in GOOGLE use any OHL NSE stock screener between 9.15am to 9.30am and take positions in market with a strict stop-loss and a pre determined target that depends on how much average move the stock makes daily historically and is expected to move on that day intra-day. Note: your gaily work time here is 09.00 hrs to 15.30 hrs, some get free by 1.00pm and enjoy life rest of the day.

Now in more details:

Margin funding brokers who succeed at day trading do three things very well:

• They identify intra-day trading strategies that are tried, tested.

• They are 100% disciplined in executing those strategies.

• They stick to a strict money management regime.

Intraday traders have an arsenal of strategies but one very popular Intraday strategy called the “Open High Low Strategy” has had reasonably good results as is evidenced by the popularity.

In this strategy, Buy signal is generated when a stock or Index has the same value for Open and Low, while a Sell signal is generated when it has the same value for Open and High.

9.45 AM: Entry for Long:

Note down previous day’s High price and aftermarket opens today, wait for the price to breakout yesterday’s high and when broken check if Today’s Open = Today’s Low at that time, if Yes go long with Stop loss as of today’s low price.

9.45 AM: Entry for Short

Note down previous day’s Low price and aftermarket opens today, wait for the price to break down yesterday’s low and when broken check if Today’s Open = Today’s High at that time, if Yes go Short with Stop loss as of today’s High price.

Exit: Exit at End Of the Day or a defined stop loss. If your stock hits a new low for the day (long trades) or new high for the day if you are short, exit the position. The new highs or lows are also reported by the Mobile App in the scanners section. A day trade is intended for initial moves, so there is no purpose in widening stops to accommodate a stock moving in the wrong direction. Get out if the stock breaks a low (or high if short) as you can reenter the trade if it triggers again.

Firstly, there is no such thing as “Best” for any form of trading style, because the moment you realize and accept it as best, the reality changes.There is nothing as best in here. You have to evolve as the markets evolve.

As Nikhil Kamath from zerodha stated - 

There is a time when trend trading works and then there is a time when scalping works, you need to smart enough to understand how you can change and evolve with the market.

Now coming to the Open=High and Open=Low strategy, well its a sensible approach but it is not full-proof. What i mean by this, is that, its half-baked. I like the approach, wherein you look for a buying opportunity in a stock which has opened at the lowest point of the day and has just rallied up and not looked back - thats positive momentum. And on the other end, a stock which opens at the highest point of the day is likely to face selling pressure for that particular trading day - thats negative momentum. The good aspect of this approach, is that after the first few minutes of market open, you have two sets of stocks which you can look to buy or sell later once you have an opportunity. And this is exactly where i say, its half-baked, because even if i know that stock XYZ has opened at the lowest of the day, and it has a tendency to go up today, how do i time my entry and exit and all the necessary actions that’ll make money?

So i suggest you should approach in 2 different set of rules. The first set of rule is open=high (short candidates) and open=low (long candidates). This was simple and easy. Now you implement a swing trading strategy within these stocks in time frame which is within (5–15)mins. So the daily chart suggest positive momentum, and on the (5–15) min chart you look for an opportunity to go long. Obviously, vice versa for a short trade. 

See,

All strategy is good but the most important thing is when and how you are going to use that.

I personally use this strategy for stock selection because we know in case of open = high do short and in case of open = low go long.

Steps to use and improve accuracy :-

First filter out the stock which is having either open = low or open = high.

Second around 11:30 am see the nifty direction

If nifty is moving up (BULLISH) then go for the stock which is having open = low

If nifty is going down (BEARISH ) then go for the stock which is having open = high

Why Open High Low Strategy (OHL) is so famous and easy!

1. You can understand this strategy very easily and implement it in the next trading session!

2. No need for pre-day analysis, Yes! you save so much of time

3. Selecting stocks becomes so easy, You just have to know the trend/direction the market is headed

Preferred, to run this strategy on at least 3 scrips so that if one fails other two will help you be in profit

If you want to trade using this strategy in intraday. You have to trade in Big quantity and for small target. You are going to need to make quick entry and quick exit then only you can make money in it. Using this strategy is very hard to manage risk reward ratio.

So Paper trade first then put real capital….

Don’t lose your hard earned money, Practice until you master one intraday trading strategy and then enter the market.

Again, if this strategy does not work for you then dont go for it. Instead, say to yourself NO this is very risky strategy. You have to wait for 5–10 mins after the opening to see if the condition breaches or not. If not you can enter and exit with.3-.5% profit. However, some scripts you found remains open=high or open=low for day long but these are very rare instance. So, now next better strategy is 15/30/45/1 hr breakout. That can give you far more safer and better profit but you may have to keep a watch on the market all day long.

Life is simple, so you just keep it simple, dont complicate it.

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