Open High Low Strategy
In simple words, open high low strategy is a strategy in which the buying signal is generated when a stock has the same value for both, open and low. Similarly, the selling signal is generated when the stock has the same signal for both - open and high. Investing in stocks or trading for years is known to be a game for those with real insidious news and finance skills.In other words, Intraday trading ensures that all positions are balanced off before the market ends and that there is no change in the management of shares as a result of trades. This clearly shows that the money flows towards the shares that are going to rise, and by the time the market closes, the shares are withdrawn. Open High Low strategy is one of the most commonly used strategies. Let's dive right in and know more about it.
What is the Open High Low Strategy?
Although there are many names similar to each other in the market, the original name comes out to be open dive. It's very clear from the name as to why it would have been chosen. The name itself reflects the risks and advantages. As the strategy can make you rich or pick rags at the same time. The approach used in the open high-low strategy is that a buying signal is created when indexes or stocks have the same value, both open and low, meaning you should buy the shares. Alternatively, the sell signal is created when the indexes or stock has the same value, both open and high, meaning you should sell the shares.
The strategy isn't as simple as it may seem. These trades are made in nifty scripts. The NIFTY 50 Index reflects around 10% of the free-float market capitalization of the shares listed on the NSE. This helps to pick the best sector to invest in and to pull the stocks out of the market at the right time. There are scanners to help interpret the stock price better with higher accuracy to know when and how to invest. Open High Low Scan is a method used to process scripts that are open=high or open=low. You can use any calculator to find thresholds to purchase or sell. Some online calculators will help you filter out the scripts that can be used for intraday transactions.
How to Execute Open High Low Strategy?
Not only does this solution require capital to gain profits, it requires full-proof strategies that have given fruitful results in history. It requires dedicated discipline towards learning the trend of the market. The money maintaining regime should be strict enough to prevent them from falling in the dirt of losses. Let's reconnoitre the ways to execute these plans successfully.
- Once you have logged into your trading account before the market opens, i.e., before 9:15, invest the required sum of money in the trade.
- As mentioned above, select the predicted stocks to grow and add them to your watchlist of the nifty scripts.
- Once the above step is done by using scanners or physical methods, know the trend of the desired stocks.
- Once you are aware of the trend and you know the approximate graph strategy in which the stock can spend, including its growth factor, in compliance with the terms of the share.
- When the market opens, based on the price and forecast accuracy of the stock, you can quickly see the stock's fluctuating price and invest money or withdraw money.
Knowing the practicality of the strategy, you can easily withdraw money or invest money at the stocks low or can buy at the stocks high. When you've already applied an open high low trading approach to your benefit, you will leave buying whether at the end of the business day or as per your default stop loss.
Example of Open High Low Strategy
There are two types of stocks in this strategy. The stocks of which the buyers control the price throughout the day. This type suggests that there is more buying demand in the stock that market investors were able to purchase the stock at a certain level throughout the day. The stock exchange hit its highest point for the day as a result. Open = low ~ buy in this situation. A trader will take a' Buy' spot within 5-10 minutes of the opening bell. Whenever the script follows the Days Open = Days Low formula.
In the second type, it's vice-versa, i.e., the sellers have control of the price all along the day. It suggests that since there it was less trading pressure on the stock that market players sold at all prices during the day. As a consequence, the stock exchange ended similar to its low point of the day. In this case, open = high ~ sell. Within 5-10 minutes of the opening bell, a trader will make a Sell spot. When the script implements the Days Open = Days Low formula. This Trading technique helps you to easily get more money out of the day of trading. However, try to leave and secure the gains as soon as possible. This technique is likely to help you make money out of online trading in a shorter period.
FAQ’S
- How to find this kind of stock?
- When to go on the buy-side and when to go on the sell side?
- When to implement this open high low strategy?
- Which chart is best for acknowledging intraday strategy?
- What is a good profit to wind up?
- What should an intraday trader target?
- What is the right time to invest in trade?
- Are multiple sources suggestable?
When the market opens from the scanner, add the stocks that are open = low and open = high to the watchlist. In this way, you can find the open high low stocks.
Unless the Nifty50 index is over 0.25 %, go on the buy side, and if this is below 0.25 %, go on the sell-side. Although it depends as some people even keep the criteria at 0.5%.
Post 30 minutes into the market opening at 9:15 am, if the high/low stays as estimated then go ahead and follow the initial strategy.
Tick charts are among the best reference points for intraday trading. When trade is big, the bar is shaped every minute. In a high-volume time, the tick chart provides insightful insights as opposed to any other graphic.
The right time to take the money invested out is as soon as your profit reaches 2% ideally.
The risk appetite and the capability of a trader to invest should be the target till the end of the trading day.
The best time to invest is after half an hour from the time the market opens as the trend by then is clear.
Yes, they are. Multiple confirmations help you decide the trend before investing.
