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A starter setup: the opening range
Mark a 15-minute opening range and define a breakout trade with a stop and a target.
This lesson gives you a complete starter setup. It is popular because it is simple, it uses the busiest part of the day and it has clear rules. Treat it as an example to study and practice in simulation before you ever trade it live.
What the opening range is
The opening range is the high and the low of the first 15 minutes after the US stock market opens, from 9:30am to 9:45am ET. During those minutes, traders react to overnight news and the open itself. The range they create often acts as a launch pad for the rest of the morning.
Step 1: mark the range
At 9:45am ET, draw a line at the highest price and a line at the lowest price from 9:30am to 9:45am. Many traders also mark the midpoint between them.
Step 2: wait for a close outside
A breakout happens when a candle closes outside the range. A quick poke through that snaps back does not count. Many traders use the 5-minute chart and wait for a full 5-minute candle to close above the high for a long trade, or below the low for a short trade.
Step 3: place the stop
If the breakout is real, price should not fall back deep inside the range. So the stop goes back inside the range. Common choices are the midpoint of the range or the opposite side for a wider stop. Pick 1 rule and use it every time.
Step 4: set the target
Aim for 1 to 2 times your risk. If your stop is 30 ticks away, your target is 30 to 60 ticks away. Check the chart for a key level in the way, like the prior day high, and adjust if needed.
Example: From 9:30am to 9:45am, MNQ trades between 20,000 and 20,040. The midpoint is 20,020. At 9:55am a 5-minute candle closes at 20,046. You buy at 20,046 with a stop at 20,019, just under the midpoint. That is 27 points, or 108 ticks. With a $108 risk limit, 108 ticks × $0.50 = $54 per contract, so 2 MNQ. Your target at 1.5 times risk is about 40 points higher, near 20,086.
Step 5: know when to skip it
- Big news mornings. On CPI or jobs report days, the range can be huge or chaotic. Skip.
- A giant range. If the range is so wide that a sensible stop risks more than your plan allows, skip or use micros.
- Back-and-forth breaks. If price breaks out, fails and breaks the other way, many traders call it a day for this setup.
Practice it first
Run this setup on market replay (lesson 16) for at least 20 sessions. Record every trade. You will learn how often the breakout follows through on your market and which stop and target rules work best for you.
Key takeaways
- The opening range is the high and low from 9:30am to 9:45am ET.
- Wait for a candle to close outside the range, with the stop back inside it.
- Target 1 to 2 times your risk, and skip it on big news mornings.
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Flight School is educational content only and is not financial advice. Futures trading involves substantial risk of loss and is not suitable for every investor. Past performance does not guarantee future results.