Open Range Breakout Strategy for Binary Options explained

The Open Range Breakout strategy for binary options is based on analyzing the highs and lows of market prices during the first hour. It measures the size of the breakout using the opening price range and the previous day’s price range, taking into account factors such as volatility, relative strength and volume.

In this article, we will clearly show you what an open-range breakout really is. We will show you how to use the strategy, how to manage the risk, and how to apply various best practices.

Binary Options 
Open range breakout trading strategy

Good to know:

  • Open range breakout strategy is based on the price highs and lows in the market’s first hour.
  • Breakout size is measured using the opening and previous day’s price range.
  • The strategy considers volatility, relative strength, and volume.
  • It includes methods like early morning breakout, gap pullback, and gap reversal, with stop losses for risk management.

What is a open range breakout strategy?

Open range breakout is a way of monitoring the market and taking a position in the trade according to the price break. It is designed to analyze the market reversal or move during the first hour.

The first hour in binary options trading is crucial as it is the most dynamic period. During this time, several traders are active, which further creates a market trend.

That means, during this hour, you can make a considerable amount of money. But you can lose the same amount if your speculations are incorrect or if you trade without a plan. That’s why you should take the help of an opening range breakout strategy to increase your profitability.

See an example here:

Open range breakout

In simple words, this strategy is high and low of an asset in a given time. Mostly, this time is 30 or 60 minutes long. During this period, you must identify the highs and lows and know the pre-market low and high.

Once you have predicted the price action of the asset and entry points by using open range breakout, you can then make a trade.

While 30 and 60 minutes are standard trading time frames, you can also choose a time frame you are most comfortable with. After selecting the time frame, you can predict price movement.

Best binary broker:
(Risk warning: Trading is risky)

Pocket Option - Trade with high profits


Pocket Option - Trade with high profits

  • Welcomes international clients
  • Offers high payouts: 90% – 97%+
  • Professional-grade trading platform
  • Swift deposit process
  • Enables Social Trading
  • Provides free bonus incentives
(Risk warning: Trading is risky)

Size of an open range breakout

Before you start trading, it’s essential to measure the size of the opening range. You can do this with the help of two candles that become available once the market opens.

Out of two candles, one is created after the market opens, and the other one is from yesterday’s trading session.

You can note down the highs and lows of the two candles. Next, you can calculate the difference between the two candle’s prices, which is the size of the opening range.

If you want to use an open range breakout strategy for intraday trading, there are three simple things to consider, i.e., volatility, relative strength, and volume.


To successfully use an open range breakout strategy, you must identify the volatility of the asset. You can do this with an ATR indicator.

Once you know the volatility, you should then hold a position in the assets that shows upcycle. Without volatility in the trade, you might lose it.

Relative strength

After volatility, relative strength is another essential aspect of winning trade by using open range breakout. You can obtain the relative strength by dividing an asset’s price with the broader market index.

To make long trades in the market, you need to concentrate on the relative strength line sloping on the upside. Similarly, if you want to make short trades, you should look for a sloping line on the downside.


range breakout trading

The basic idea is to make a trade on the long side of the respective trade. In simple words, relative strength is a way of looking for underperformers for short trades and outperformers for long trades.

Another way of making profitable open range breakout trade is by spotting volume. You can either manually look for the volume or can find it with the help of some tool.

What is the open range breakout calculator?

In open range trading, an important aspect is a breakout. That’s because when the price of an asset breaks down, it shows a change in the market. Also, the breakout indicates two things:

  • If the stock breaks open range upwards, then the price of an asset will proceed to travel in the bullish direction.
  • On the other hand, if there is a break in the opening range downwards, the price will move in the bearish direction.

If the price breaks out of the opening range, that means you can enter the trade. Following this,  you can open the trade in the direction of the breakout. And lastly, you can place a stop loss in the middle.

Different open range breakout trading strategies

Here are a few helpful Open range breakout trading strategies:

Early morning chart breakout

Out of all the available trading strategies, this is the popular one. That’s because it focuses on the breakthrough, it’s high/low, and the size of the gap.

Using this strategy, you can identify the boundaries of gaps and then trade in the breakout direction. You should always place a stop loss in the middle of the gap when using this trading strategy.

Chart pattern gap pullback buy

This strategy is another successful way of using Open range breakout trading. After spotting a bullish gap on the trading chart, you can use this strategy. Following this, the price of an asset moves in the opposite of the gap direction, meaning bearish. This thing is known as a pullback.

If you are using chart pattern gap pullback buy, you must know the right time of purchasing the pullback. Reversal candlestick patterns reveal the right time.

After identifying a reversal candlestick pattern, you should wait for the approval. Lastly, you can place a stop loss below the lowest point of the opening range to avoid losing trade.

When using this trading strategy, you are required to trade for a minimum bullish

Gap reversal

opening range breakout strategy is gap reversal

The last opening range breakout strategy is gap reversal. The gap reversal occurs when the range breaks in the reverse direction, and there is a gap.

In this scenario, if the gap reversal happens when the price breaks the upper level of the opening range, you can conclude that the gap is bearish. On the other hand, the gap will be bullish if the price breaks the lower level of the opening range.

Just like in the other two trading strategies, you are supposed to place a stop loss in this trading strategy as well. In this trading, you should hold the trade for the size of the gap to the minimum price move.

Best binary broker:
(Risk warning: Trading is risky)

Pocket Option - Trade with high profits


Pocket Option - Trade with high profits

  • Welcomes international clients
  • Offers high payouts: 90% – 97%+
  • Professional-grade trading platform
  • Swift deposit process
  • Enables Social Trading
  • Provides free bonus incentives
(Risk warning: Trading is risky)

Identify high profitability in an opening range breakout

open range

Importance of narrow range

In Open range breakout trading, you should focus on cluster candles rather than a single candle. That’s because narrow range clusters give a better idea of market movement. You can identify narrow range candles concerning, X candles. Here, X is the number of days.

Two widely popular narrow candle patterns are NR7 and NR4, i.e., Narrow Range 7 and Narrow Range 4. You can spot NR7 when the current candle range is the smallest among the last seven candles. Similarly, NR4 is when the range of candles is the smallest among the previous four candles.

Both are essential filters since the open range breakout shows volatility expansion and the narrow range represents volatility contraction.

Importance of high volume nod

Before starting a trade, you should understand the importance of a high-volume nod. You can spot the high-volume nod by looking for the area where the maximum trading activity takes place.

If the high volume nod is located above the opening range breakout, you can trade as it is one of the most profitable areas.

Importance of stock selection

Another important thing is to select the right kind of asset. If you want to make more profit, you should choose an asset that is highly volatile by nature. But if you want to play safe, you can select a familiar asset.

Importance of VWAP indicator

VWAP indicator

Some significant breakout in the opening range breakout strategy happens above the VWAP indicator.

But if the stock breakout takes place way above or below the indicator, you should avoid trading it. To be precise, you should avoid taking trades if the gap range is more than 2%.

Conclusion- Maximize your success with open range breakout strategy

Open range breakout is a vital trading strategy that can help you win a large amount of money. But for increasing profitability, you should look out for key levels. Additionally, it’s essential to follow a solid trading strategy to avoid losing trade.

You can also place a stop loss above or below the breakout to manage risk. Furthermore, if the trade moves as per your expectations, you can find a winning exit point.

Overall, whether you have recently started trading or are trading for a while, you should always start small to be successful in the opening range breakout strategy.

➨ Sign up with the best binary broker Pocket Option now!

(Risk warning: Your capital can be at risk)

Frequently asked questions about open range breakout strategy:

What is an Open Range breakout strategy in binary options trading?

The Open Range Breakout strategy is a method used in binary options trading to monitor market movements and take positions based on price breaks during the first hour of the market opening. This strategy is crucial as the first hour often sets the trend for the day. Traders identify the high and low prices in this period and make trades based on the predicted price action and entry points.

How do you determine the size of an Open Range breakout?

To measure the size of an open range breakout, traders use the highs and lows of two key candles: one from the market opening and the other from the previous trading session. The difference in prices between these two candles represents the size of the opening range. This measurement is crucial for setting up trades and managing risk in intraday trading.

What are some effective Open Range breakout trading strategies?

Key strategies include the early morning chart breakout, which focuses on the size and direction of gaps; the chart pattern gap pullback buy, which involves trading on pullbacks after a bullish gap; and the gap reversal strategy, where trades are made based on the direction of the gap reversal. Each strategy requires careful observation of market patterns and the placement of stop losses to manage risk effectively.

What factors should be considered for high profitability in open range breakout trading?

Traders should focus on narrow range clusters (like NR7 and NR4 patterns) for better market movement prediction, understand the importance of high-volume nods for identifying active trading areas, select the right kind of volatile or familiar assets, and use the VWAP indicator to spot significant breakouts. Managing risk with stop losses and starting with small trades are also crucial for success in this strategy.

About the author

Percival Knight
Percival Knight is an experienced Binary Options trader for more than ten years. Mainly, he trades 60-second trades at a very high hit rate. My favorite strategies is by using candlesticks and fake-breakouts

Write a comment