The Dark Side of ORB Trading (Nobody Tells You This) transcript

The opening range breakout. Everybody talks about it. Everybody tries it. But almost nobody trades it profitably. In fact, the orb is one of the fastest ways to blow up your account if you don't know the trap I'm about to show you. In this video, I'll break down exactly what the orb is, why most traders lose with it, and then I'll show you the winning twist that flipped this setup from inconsistent to one of my most reliable strategies.

Stick around to the end because I'm going to show you the exact rules I use, real chart examples and my risk management plan so that you can plug this straight into your trading. First, we are going to cover the orb basics. What is the opening range breakout? Then I'll show you why traders fall into the orb trap and lose money. After that, I'll reveal the twist that changes everything. I'll prove it with real chart examples and then I'll give you the exact risk and target rules I follow to stay consistent.

Let's jump in. So what is the orb? It starts with the first 50 minutes after the session opens. You mark out the high and the low of the first 15minute candle range. That is your orb box. That is your opening range breakout zone that you wait for price action to break out. The classic idea is that when price breaks out of this box, you take a trade in that direction. It sounds clean and simple, but here's the catch. If you trade orp this way, the way that most people do, you're almost guaranteed to get stopped out.

And here's why. If we have to look at that very first 15minute candle of the range, people go ahead and mark out the high and they mark out the low but they do not look at what the higher time frame is doing and what is supposed to be happening in price action to the left. If we are at a swing point and we have swept out a swing high and people think that okay cool we have broken out of this range let's place a buy position with our stop loss below this candle low and we target a simple 2R.

What have to what happens more often than not is price action just sweeps out a short-term high and then runs through their stop- losses and they keep on blaming the strategy and blaming the setup for their losses, but they do not understand what the market is really showing them. So later on in this video, I'm going to show you exactly what we need to wait for as smart money traders to trade this and turn this into a very, very profitable strategy.

So most opening range breakout trades fail and they fail for the same three reasons. Reason number one, false breakouts. Price loves to poke above the range, suck traders in and then slam back in the other other direction and you just became the liquidity. So what they do is they mark out their high and low of the first 15-minute candle. the 5m minute closes above and they immediately take their buying position stop- loss at the candle low but they didn't realize that this spike is just a liquidity grab and they become the liquidity for the bearish movement.

The second reason they fail is they don't they don't wait for any structure confirmation. Traders see a candle push out of out of the box and they instantly hit buy or sell. but the market hasn't chosen a direction yet and they're basically guessing. They're getting into their trades way too early. And the third reason they fail is overtrading. They chase every breakout like it's going to work out. If you take every breakout you see, you'll give back every win you make.

Trust me, I've been there. When I started trading orbs, I thought I'd found the holy grail of trading, but I was just getting chopped to pieces. And that's the trap. But there is a way out. So here's the twist. It flips the orb from frustrating to consistent. Step number one, we are going to wait for a breakout on the fiveminut chart. We're not just going to wait for the market to go ahead and close above the level. that is not going to be a valid signal.

And this alone filters out a ton of false signals. Step number two, we're going to wait for an overlapping fair value gap that crosses the higher low. So, how does that look like? Well, if I have to draw out the 15-minute candle here, and we are going to look for buys, and what are we going to wait for? We're going to wait for the market to come close to this level, displace through that level, and create an overlapping fair value gap.

If you do not know what a fair value gap is, it is a three candle pattern where the low of the third candle and the high of the first candle do not touch each other. We're going to wait for that to happen. That fair value gap has to be the same candle that breaks out of the range. That has to be the middle candle. It is even better if the fair value gap overlaps with the actual range high. That is what we are going to wait for.

This is not just a random push. This is displacement through the level to show you that buyers are in control. Now, step number three, we're going to wait for the market to retest that high or low of this initial candle that has a fair value gap overlapping it. That is what we're going to do. This is where patience pays off because most traders jump in way too early. And then step number four, we're only going to take the trade when the retest candle gets engulfed. that engulfing candle, that is your confirmation that this breakout is real and ready to run.

Now, instead of gambling on every push, you're waiting for precision entries. You're filtering out the traps and only trading when the market provides its hand. So, we are going to wait for again wait for that retest into that fair value gap. We're going to get a bearish candle that trades into that gap. And our actual entry is going to be an engulfing bullish candle in this example because we are trading in a bullish sense.

Waiting for that engulfing candle. And as soon as that candle closes, that is your entry. We're going to place our stop loss at this low. And our first target will be a clean 2. So, I'm going to show you how people normally trade the opening range breakout and why you shouldn't do that. What they do is they come to the market right before 9:30 open. They're on the 15-minute time frame looking at ENQ or NASDAQ or NAS 100 or US 100.

They wait for that very first 15-minute candle to print. that candle prints, they take their measuring tool, measures the line, draws out the low, draws out the high, and they go to their five minute time frame, and they wait for the very first 5m minute candle breakout. Now, if you want to trade this way, it is nice and simple. You can, but keep in mind, you're going to blow your account. So, they go ahead and they wait for that very first 5m minute candle to close above or below the range. that very first candle closes above the range.

They take the entry at the candle close, stop loss at that candle low and they target their two R. That is what they go for. Now this is the trade that they normally take and they see that very first candle and they get very excited and they full port and they just see price action just starts melting against their position and they get stopped out. So now they look at their higher time frame and they try to figure out why didn't this trade work.

Well, they look left and they see a major swing point. So they see, okay, cool. The market has taken out liquidity and with this liquidity being taken out, they receive a change in the state of delivery with downlosed candles closing below this up close candle forming an order block. and they think, "Okay, now I'm going to take the sell because now I should be in the correct direction of the market." So, they go and they wait for a first 5m minute candle close below that 50minut range low and they still think to themselves, "Not yet.

We're rejecting. Let's wait for a body closure." Well, they wait for the body closure and now they're ready. Now they take their cell stop loss at that high because they've learned their lesson. target still 82R and let's see if this trade wins. This is how people trade and they get stopped out immediately. This is how people trade. After two losses, you should be done for the day and you shouldn't take two losses in a single day.

Now, this is not a profitable way to trade. I'm going to show you exactly how you should do this to pass your prop challenges to get funded, get consistent payouts, and ultimately change your life. Now, I'm going to show you with the method that I just taught you how we could have avoided this loss. So, the rules stay the same. We go to the first 15-minute candle of 9:30 market open. We mark out the high. We mark out the low.

We drop then back to the 5minut time frame. And here on the 5minut time frame, what do we do on the 5minut time frame? We wait for a break above or a break below. The same as the previous method. Now here we see we do get that break above. And what is very important that we note here, we do have a displacement through that level. We have a fair value gap. The low of the third candle and the high of the first candle do not touch each other.

So what do we do now? Now we simply wait for the market to trade back into this gap, retest the high and then give us our engulfing candlestick. That is very very important. So playing price action ahead, we see we retrace back into that fair value gap. But do we trade into the high? No, we don't. There's still a gap in price. I want to see that high being rejected. Looking for the market to trade into the high. We trade into the high.

Is this an engulfing candlestick? No, this is not. We need a candle closure above this down close candle to be considered an engulfing candlestick. We do. We then inverse that fair value gap. Now, I want to see a candlestick close above this bearish candle. Do we get that? Well, we almost got it. But did we close above it? No. The very next candle tries to close above it and form an order block, but that fails. So, we're still not in our trade yet.

And then playing this along, we see that price action just runs and we take out the low, which invalidates our long idea. But now, my eyes are drawn to this low. So, if I go ahead and I thicken this line up, what do I want to see? I want to see a breaking close below that forms a fair value gap. Let's see if we get that. The market still struggles. Playing price action ahead. What do we see? We don't get a fair value gap where people would normally go and enter a short here, place a stop at that high because we've broken out of the low.

The market fails to give us our entry criteria. So, we're not in a trade yet. And what happens now? Now, we trade back up to the high. And do we get our entry reason? Well, we do trade back to the high. We do have a fair value gap that forms marking out that gap. What do we need? We need price action to trade back into that gap and into the high and give me my engulfing candlestick. Let's see if we do get that. Playing price action ahead.

What happens? We simply miss the level and we run away. So yes, we've missed this trade, but what happened here? Here we avoided a loss and over here we avoided a loss. Remember, a loss saved is still money gained in your account. That is very important when it comes to trading. Knowing when to sit on your hands will turn you into a profitable trader. Now, here I've just fast forwarded to the very next day. We just ran through this piece of price action and we avoided the loss there and we avoided a loss over there.

Now we've just played ahead to the very next day. So what do we do? We come to our charts right before 9:30 open in the New York hill zone. We wait for the first 15-minute candle to print of that New York open. So waiting for the candle to print, we see the candle prints and we do get displacement. Something to note here, we do displace through highs forming a fair value gap. So we do have a very strong idea that the market is going to continue bullish.

But keeping it 100% mechanical, we mark out the high and we go ahead and we mark out the range low. So what do we do now? Now we go to the 5m minute time frame and we simply wait for the price action to break out of this box and give us a fair value gap. So waiting for price action to trade higher and break out of the box here. We do close above the box we form a fair value gap. So I want to see price action trade back into this gap and trade into the high.

Waiting for the market to do just that. What do we get? We see that we do trade into the high. We touch the fair value gap. But do we have an engulfing candle? No. I want to see the candle that trades into the low into the fair value gap and the high that made the low get engulfed. So I want to see a candle closure above it. What does this form? This forms my order block. So, entry there, stop loss at this swing low cuz I do not want to see the market come back and raid this again.

Then I know I'm wrong with my idea and I get out of the trade as quickly as possible. Then what do we do? Well, first target is a 2 R and then we can secure partials. We go to a higher time frame and we leave a very small runner running. Playing price action ahead. Price action runs higher. we do struggle a little bit and then eventually we are taken out of our position for a 2. So for everybody who stuck around to the end of the video, I'm going to go through an entire top-down analysis on how you can improve your win rate using this strategy.

So starting here on the daily time frame on NQ, what do we see? We see the market just busy pushing higher and higher and higher. We have higher high, higher low, higher high. So we're in an uptrend. What happens? We sweep out external range liquidity and the market leaves behind fair value gaps. Over here we have a fair value gap that the market has left behind. Now we all know that the market goes from external back to internal range liquidity.

If we sweep out external range liquidity, the market is going to come and seek out internal before either sweeping external or failing to the next external range liquidity. That is the cycle of price action. So looking at this daily time frame, what do we see? We push higher. We have 3 days of expansion. The market can't always expand. So what is our next phase of price delivery? We go from expansion to consolidation to expansion or expansion to reversal to expansion.

Now here we're into expansion. This can either e either be a consolidation and expansion or it can be a consolidation and a reversal. Looking at this, we have swept out a previous swing high. We have internal range liquidity that the market has left. So there is a high likelihood that this is going to be expansion into a reversal. Then dropping to our 1 hour time frame, playing price on till our trading window. What do we see here?

Here's that first example I showed you. The second example I showed you. Looking at this, what do we see? Well, first things first is we failed to displace above a high. Because we have failed to displace above that high. I'm looking for the market to trade down where lower. Here we have my first lowhanging fruit. And if I go out here, we have that daily fair value gap. So I have a bearish bias with this market. Also looking at this market, we do have a nice change in the state of delivery closing through up close candles.

So my mindset going into our trading session is going to be bearish looking waiting for that 9:30 open. Let's get that 9:30 open. We go to the 15minut time frame. Here on the 15-minut time frame, what do we do? Well, we do go back just before 9:30. And here on the 15-minut time frame, what happens? We see the market trade and reject a fair value gap and we form an order block or propulsion block out of that area. So, this alone tells me that I'm bearish.

That plus my daily and 1 hour analysis gives me every excuse in the book to look for sells with this position. Playing the price action forward. We get that 930 candle. We mark out the high. We sweep. Look at this. We manipulate and we distribute lower. So that also aligns with what I'm looking at. We also reject our initial order block without closing into it. So I hope you can see how these footprints in price action give you a very high probability chance of success.

Dropping to the 5minut time frame here on the 5 minute we have our high we have our low marked out. What do we wait for now? Now we simply wait for a 5minut candle break and close that forms a fair value gap. Now two examples we have our first 5minut candle break. Normally this strategy is taught like this. Entry on the candle, stop loss at the high and we target at 2 R. That's how this normally is traded. But if we play this ahead, we see you get stopped out.

But if we wait for the method I teach you in this video, look at the difference over here. We do have that candle break. What do we have? We have a fair value gap overlapping with that range. So what do we do now? Now we wait for the market to trade back into that range and then give us an engulfing candle playing price action forward. We trade back into that level and what happens? We immediately get our engulfing candle.

Stop loss at the high or you can place it just slightly above the high for spreads or commissions or just a quick breathing room. And then we target, our first target is a two R. Now what happens? We almost get stopped up, but we don't. Price action consolidates a bit and we run through our takerit. So where can we take our second position? Well, look what happened. The market traded all the way to that daily fair value gap and we're out of this position for a 6.11R.

I hope you can see how using top-down analysis is very beneficial to your trading. Now, if you want to see me trade live like this every single day where I share my screen, you trade live with a sevenfigure trader, go ahead and check out the link in my description and I'll see you guys inside. I hope you enjoyed the video and let me know what you want to see on the channel in the future.