Long-Only Opening Range Breakout (ORB) with Pivot Points

pinescript //@version=4 study("My Strategy", shorttitle="MS", overlay=true) let EMA_fast_length = 9 let EMA_slow_length = 21 let RSI_length = 14 let RSI_overbought = 70 let RSI_oversold = 30 let ema_fast = ema(close, EMA_fast_length) let ema_slow = ema(close, EMA_slow_length) let rsi = rsi(close, RSI_length) plot(ema_fast, color=color.red) plot(ema_slow, color=color.blue) longCondition = crossover(ema_fast, ema_slow) and rsi < RSI_oversold if (longCondition) strategy.entry("Long", strategy.long) shortCondition = crossunder(ema_fast, ema_slow) and rsi > RSI_overbought if (shortCondition) strategy.entry("Short", strategy.short) strategy.close("Long", when = rsi > RSI_overbought) strategy.close("Short", when = rsi < RSI_oversold)

This trading strategy automates the process of entering long positions based on the Opening Range Breakout (ORB) approach, complemented by Pivot Points to optimize entry and exit points. It capitalizes on initial market volatility, taking trades when prices break above the predefined opening range, while pivot points serve as milestones for stop-loss and dynamic trailing adjustments.

To trade this strategy manually on TradingView, begin by charting the relevant asset. Then, proceed as follows:

• Determine the Opening Range: Set the period for the opening range, typically the first 30 minutes to 1 hour of the trading session. Mark the high and low of this range with horizontal lines.
• Identify Pivot Points: Calculate the previous day’s pivot points using TradingView’s built-in Pivot Point Standard indicator. Focus on the R1 level as it will serve as a part of the entry condition.
• Entry Condition: Watch for the price to break and close above the opening range high. Confirm that the R1 pivot point is also above the opening range high. Enter a long position on a break and close above this confluence area.
• Initial Stop Loss: Choose between the percentage-based or previous day’s low for the stop loss. Set this manually below your entry point.
• Exit Conditions:
  • If the price reaches a higher pivot level (e.g., R2), consider taking partial profits.
  • Adjust the stop loss to just below new pivot levels if they form below the entry price to lock in profits.
  • End of day exit: Close any open positions at the end of the trading day to avoid overnight market risk.
• Max Trades Per Day: To adhere to the original script’s discipline, set a daily trade limit. Monitor and execute no more than the predetermined number of trades.

In addition to these steps, enhance the strategy by integrating volume analysis to confirm breakout strength, adding extra layers of confirmation. Regularly backtest and adjust the strategy against historical data to ensure its efficacy. Factor in economic announcements that may impact market volatility, thus affecting the reliability of the ORB signals. Lastly, journal your trades to identify patterns in both successful and unsuccessful trades, allowing for continuous improvement of your manual trading approach with this strategy.

This strategy is tailored for intraday traders who thrive in the fast-paced environment of the market's opening hours. It suits those comfortable with analyzing technical indicators, specifically Pivot Points, and are adept at quickly responding to price breakouts. The strategy's design gravitates towards traders who favor a disciplined approach, setting defined entry, stop loss, and exit conditions to manage trades within a single trading day.

• Active Day Traders: Those who prefer to initiate and close positions within the same day to avoid overnight market risk.
• Technical Analysts: Traders with proficiency in interpreting chart patterns and technical indicators to inform trading decisions.
• Volume Assessors: The strategy also aligns well with traders who include volume analysis to confirm the strength of the breakout.
• Risk-averse Traders: Individuals looking for structured risk management, including set stop loss and dynamic trailing stops, will find this strategy appealing.

Overall, the methodical and rule-based nature of this strategy aligns well with traders who value a systematic approach to capturing short-term market movements.

Key Takeaways:

• Strategy Focus: Targets initial market movement at the opening for capturing potential trend days.
• Application: Best used in a volatile market environment by intraday traders with a technical background.
• Automation: Scripted in Pine Script for deployment on TradingView, with customizable settings for precise execution.
• Manual Trading: Requires marking of opening range and pivot points; manual entry and exits on price confirmation.
• Optimization: Incorporate volume analysis and economic announcements for better signal verification.
• Risk Management: A clearly defined initial stop loss, dynamic trailing stops, and end-of-day exit help minimize risk.
• Discipline: The strategy includes a cap on the number of trades per day to maintain trading discipline.
• Continuous Improvement: Enhance by assessing trade journal insights and backtest with historical data for strategy refinement.