Intraday trading can be quite overwhelming for beginners. However, certain strategies have stood the test of time, and are used by both newbie and veteran traders today. One such strategy is the Open = High/Low (OHL) Strategy. This simple yet effective approach helps traders identify market trends early in the trading session, making it a good choice for those new to trading.
In this article, we will explore the OHL strategy in detail! We’ll be covering:
Before diving into the strategy, we need to learn the basics of candlesticks in the stock market. A candlestick represents the price movement of a security/stock over a specific time frame. It graphically represents price and volume data. A candlestick shows a stock’s opening and closing prices and the high and low prices during a period. These price points are known as the OHLC data in short, which stands for Open, High, Low, and Close, respectively.
The Open is High/Low (OHL) Strategy is fundamentally based on three key price points during the trading day:
The core principle of the OHL strategy is:
Let’s make it easier to learn:
If Open = Low → Buy the stock
If Open = High → Sell the stock
This strategy capitalises on the initial market movements, particularly during the first 15 minutes after the market opens. There’s typically higher volatility during this time, and price movements can be more defined.
With thousands of stocks available, finding the right ones can be challenging. You can filter stocks using a free screening tool we’ve created!
1. Use an OHL Screener Tool: This tool scans all F&O (Futures & Options) enabled stocks and identifies those meeting OHL conditions.
2. Apply Filtering Criteria:
3. Focus on Nifty 50 Stocks: Filtering further by Nifty 50 stocks increases reliability.
For example, if you notice that a stock opens at 100 and remains at that level without dropping below, it may indicate a bullish trend. On the other hand, if it opens at 100 and does not rise above that level, it could signal a bearish trend
To improve trade accuracy in the OHL strategy, consider these factors:
The OHL strategy is a simple yet powerful approach for intraday trading. By following structured entry, exit, and risk management rules, traders can maximise profitability while minimising risk. Always back-test your strategy and follow strict risk management principles before applying it to live trades.
Use the OHL strategy, use screening tools, and apply disciplined trading practices to gain an edge in the stock market. Happy Trading!
Disclaimer: Trading in financial markets involves significant risk, and past performance is not indicative of future results. Always trade within your financial capacity, and consult with a professional financial advisor if needed. The information in this article is for educational purposes only and should not be considered financial advice.