Half range and full range are terms used in the context of the Opening Range Breakout (ORB) strategy to determine stops and targets. Understanding these terms is essential for implementing the strategy effectively.
Half-Range
Half range represents half of the width of the opening range.
- If a half range stop is used, it means that the stop will be placed at the halfway point of the ORB range, between the ORB high and ORB low.
- If a half range target is used, it means that the target will be placed at the half range above or below the breakout range (ie. an extrapolation).
Here’s an example of a half-range stop and a half-range target:
Full-Range
A full range represents the entire width of the opening range.
- If a full range stop is used, it means that the stop will be placed outside of the opposite side’s breakout level.
- If a full range target is used, it means that the target will be placed at the full range above or below the breakout range (ie. an extrapolation).
Here’s an example of a full-range stop and a full-range target:
Risk to Reward Ratios (R/R)
You can select between half range stops and full range stops, as well as half range targets and full range targets for all the different permutations. This allows for greater flexibility in trade management and risk-reward assessment.
To quickly identify the selected stops and targets, we’ve built in a risk/reward column directly into the Live Scanner.
- 1/1 Risk Reward Ratio: If you have a half-range stop and a half-range target selected, the risk/reward ratio will be 1/1. If you have a full-range stop and a full-range target selected, the risk/reward ratio will also be 1/1.
- 1/2 Risk Reward Ratio: If you have a half-range stop and a full-range target selected, the risk/reward ratio will be 1/2.
- 2/1 Risk Reward Ratio: If you have a full-range stop and a half-range target selected, the risk/reward ratio will be 1/2.
Pro Tip:
To skew the Risk/Reward ratio 1/3 in your favor, find backtests with positive backtests for full-range stops and full-range targets. Any pullback opportunities to the half-range level within the opening range is your entry zone, instead of the breakout level. This allows you to have an entry at the 1/2 opening range level, while targeting a full range above the breakout level (hence, a 1-3 risk/reward ratio).
In conclusion, understanding the difference between half range and full range is essential for implementing the ORB strategy effectively. By selecting the appropriate stops and targets based on market conditions, traders can improve their risk management and enhance their profitability.