In intraday trading, timing is everything. Traders try to predict price movements during the day to make profits. One of the popular strategies for intraday traders is the Open High Open Low (OHOL) strategy. This strategy helps traders analyze the price action at the beginning of the trading day to predict how the market will move. In this blog, we will explain the Open High Open Low Strategy in simple terms, how it works, and how you can use it to make smarter trading decisions.

Introduction

The Open High Open Low Strategy (OHOL) is a technique used by intraday traders to predict the direction of the stock price movement based on the opening price and high and low prices during the first few minutes of the trading day. This strategy is simple to use and can give you insights into whether the stock price is likely to go up or down. It’s mostly used by traders who are looking to capitalize on small price movements during the day. By understanding the OHOL strategy, you can make better decisions on which stocks to trade and when to enter or exit a position.

Features of the Open High Low Strategy

Here are some important features of the Open High Open Low Strategy:

1. Relies on Opening Prices: The OHOL strategy looks at the opening price and the highest and lowest prices achieved within the first few minutes of the market open.

2. Quick Decision Making: It allows traders to make quick decisions based on the early movements of the stock market.

3. Effective for Intraday Trading: This strategy is best used for intraday trading, where the goal is to buy and sell stocks within the same day.

4. Simple to Use: The strategy is simple and doesn’t require complex analysis, making it ideal for beginners in the trading world.

Working of Open High Open Low Strategy

The Open High Open Low (OHOL) strategy works by analyzing the price movement within the first few minutes after the market opens. Here's how it works:

1. Identify the Open Price: The open price is the first price at which a stock is traded when the market opens.

2. Watch for High and Low Prices: Look at the highest price and lowest price the stock hits during the first few minutes after the market opens.

3. Analyze the Trend:

   • If the high price is above the opening price, it shows strength, and the stock may continue to go up.

   • If the low price is below the opening price, it shows weakness, and the stock may fall.

4. Action: Based on this analysis, traders decide whether to buy or sell. If the price is strong and moving up, traders may buy, and if the price is weak, traders may sell or short the stock.

By understanding how the stock moves in the first few minutes, you can decide your entry and exit points in the market.

Open your Trading Account today!

Things You Should Know Before Using Open High Open Low Strategy

Before you start using the OHOL strategy, here are a few things you should know:

1. Market Volatility: The strategy works best in volatile markets. If the market is too flat, it might not work well.

2. Strong Open is Key: The strategy relies heavily on a strong market open. If the market opens with a gap up or gap down, it might indicate the direction of the market for the rest of the day.

3. Timely Execution: Since the strategy depends on quick price movements, you need to act fast when making decisions.

4. Risk Management: Like all trading strategies, there is a risk of loss. Always use stop-loss orders and have a plan to minimize your risks.

How Practically Trade Using Open High Open Low Trading Strategy?

To practically use the OHOL strategy, follow these steps:

1. Check Market Opening: Start by watching the first few minutes of the market opening. Note the open price, highest price, and lowest price.

2. Look for Key Patterns:

   • If the stock's high price is above the open price, it could signal a buy signal.

   • If the stock’s low price is below the open price, it could signal a sell or short signal.

3. Set Your Target: Decide on a target price for your trade based on the initial price movement. Also, set a stop loss in case the trade goes against you.

4. Exit the Trade: When the stock price reaches your target or hits your stop loss, exit the trade.

How Can OHOL Strategy Determine the Type of Trading Session?

The OHOL strategy can help you identify whether the trading session is likely to be a bullish (rising) or bearish (falling) session based on the price movements within the first few minutes. Here's how:

1. Bullish Session: If the price goes up quickly after the market opens, and the high price is above the opening price, it indicates that the bulls (buyers) are in control. This suggests that the market will likely continue to rise during the day.

2. Bearish Session: If the price falls after the market opens, and the low price is below the opening price, it indicates that the bears (sellers) are in control. This suggests that the market will likely continue to fall.

3. Neutral Session: If the market opens with no strong movement and the high and low prices are near the opening price, it indicates that the market may not show a clear trend, and it could be a sideways session.

By analyzing the initial price action, you can quickly determine the trend of the day and adjust your trading strategy accordingly.

The Open High Open Low (OHOL) strategy is a simple yet powerful tool for intraday traders. By focusing on the first few minutes of the market, this strategy helps traders make quick decisions about whether to buy or sell stocks. While it’s an effective strategy for trading in volatile markets, it’s essential to remember that like any strategy, it comes with risks. Always make sure to manage your risks carefully and stay informed about the market conditions.

Explore more: What is the Intraday open High Low strategy? | When and How to use Intraday Open High Open Low Strategy

FAQs on Open High Open Low Strategy