This guide explains the setup, the rules, a worked example, the filters that matter and how to scan for and automate it.
At a glance
| Open high low strategy | |
|---|---|
| Type | Intraday momentum |
| Markets | Liquid NSE F&O stocks, stock futures |
| Timeframe | 5-minute and 15-minute candles |
| Scan time | After the first 15 minutes, at 9:30 |
| Long setup | Open = low of the day so far |
| Short setup | Open = high of the day so far |
| Entry | Break of the 15-minute high (long) or low (short) |
| Stop | Just beyond the open |
| Exit | A target of 2 times the risk, a trailing stop, or by 15:15 |
Why the open matters
For NSE stocks, the opening price is set in a pre-open call auction. Orders are collected from 9:00 to 9:08, matched to find a single price, and normal trading starts at 9:15. The open reflects overnight news and the orders waiting before the bell.
If the stock never trades below that price in the first 15 minutes, every seller has been absorbed at or above the open. The open becomes a level that buyers defended, and a natural place for a stop.
The rules
Long trades
- Scan at 9:30: the day's low equals the open, within a tolerance of 0.05% to 0.1%.
- Strength filter: the price is above the previous day's close and above VWAP.
- Entry: buy when the price breaks above the high of the first 15 minutes.
- Stop: just below the open.
- Target: 2 times the risk, or a trailing stop once the price has moved 1 times the risk.
- Time exit: close any open trade by 15:15.
Short trades
The mirror image: open equals the high, price below the previous close and VWAP, a sell below the 15-minute low, a stop just above the open.
A worked example
A hypothetical F&O stock closed at ₹1,000 yesterday. Today it opens at ₹1,008. In the first 15 minutes its low is ₹1,008, the same as the open, and its high is ₹1,019. At 9:30 it trades at ₹1,016, above VWAP.
- Entry: ₹1,019.50, on a break of the 15-minute high
- Stop: ₹1,007.50, just below the open, a risk of ₹12 a share
- Target: 2 times the risk, ₹1,043.50
- Position size: with ₹3,000 risk per trade, 250 shares
The trade risks ₹3,000 to make ₹6,000 before costs. Check the costs for intraday equity in the brokerage calculator. These numbers illustrate the rules, not a result.
Filters that matter
- Tolerance. A strict "open equals low" rule depends on a single tick. A tolerance of 0.05% to 0.1% catches the same idea without missing near-misses.
- Gap size. A large gap up with open equal to low can be exhausted early. Some traders skip gaps above 2%.
- Market direction. Long setups work better when Nifty is also above its open. Taking longs against a falling index lowers the hit rate.
- Liquidity. Use stocks with tight bid-ask spreads. The stop is close, so slippage matters.
- Volume. A first 15 minutes with volume above the stock's usual opening volume shows real interest.
When the strategy works, and when it does not
Works best when:
- There is news or a sector move behind the stock's direction.
- The broader market trends in the same direction during the morning.
Struggles when:
- The market reverses mid-morning. Many OHL setups fail together on such days.
- Stocks open flat with no gap. The open is then a weak level.
- Spreads are wide. A tight stop gets hit by noise.
Scanning and automating
At 9:30, the scan has to check every F&O stock's open and low. Doing this by hand takes minutes, by which time the breakout may have passed. In QuantPower you can set up the conditions in the strategy builder and use a market alert for the breakout:
- Condition: day's low within 0.1% of the open at 9:30, price above VWAP and the previous close.
- Entry: a stop order above the 15-minute high.
- Stop below the open, target at 2R, time exit at 15:15.
- An MTM stop loss for the whole day's trades.
Run the rules in paper trading for a few weeks first.
Backtesting the strategy
- Use 1-minute or 5-minute data so the 15-minute high and low are exact.
- Include the scan's real limits: only signals available at 9:30, and entries after that time.
- Model slippage on entry, because breakouts often fill above the trigger.
- Test the tolerance, the gap filter and the target. The opening range breakout is a close relative worth comparing.
Common mistakes
- Entering at 9:16. One minute of data says little. Wait for the first 15 minutes.
- Too many trades. On a strong day dozens of stocks qualify. Limit the number of positions.
- Moving the stop. The open is the level the setup relies on. If it breaks, the idea has failed.
Frequently asked questions
What is the open high low strategy?
An intraday setup that buys stocks whose open is the low of the day and sells those whose open is the high, after the first 15 minutes.
Does open equal low mean the stock will go up?
No. It shows buyers held the open early in the day. Many such stocks still fall later. Use a stop.
Can the strategy be used for Nifty?
It is mostly used for stocks. For Nifty, the opening range breakout is the more common version of the same idea.
What time should I scan?
At 9:30, after the first 15 minutes. Some traders scan at 9:20 with 5-minute candles, which gives more signals and more false ones.
Sources
- NSE, call auction in the pre-open session (equity segment)
- Crabel, T. (1990). Day Trading with Short Term Price Patterns and Opening Range Breakout. Traders Press