Legacy From The Stock Markets – The Open Range Breakout

Rush system is based on a powerful trading system that comes from the world of the stock markets. Intra-day stock traders have been exploiting the Open Range Breakout strategy for ages. And they continue to do so. That’s because this strategy is easy to understand, simple to execute, and above all, profitable.
The Open Range Breakout intra-day stock trading strategy works like this: once the wall Street opening bell rings at 9:30 am EST, breakout traders chart the first 20 or 30 minutes of action for certain, particularly volatile stocks. This opening timeframe is usually filled with wild swings as emotions run high in the early trading. Breakout traders mark the high and low point of that early period of volatility, and then watch closely to see which way the stock trends from there. Once the stock “breaks out” of that range, either to the upside or to the downside, the trader can confidently gauge the general direction the stock is likely to take for the rest of that trading session.



SUMMARY: The Open Range Breakout strategy attempts to predict a likely trend for the day by analysing the direction of the first “real” move once those initial, often confusing minutes have settled down.

Please keep this concept in mind, as it forms the basis for Rush system.

But before I explain just how we’ll be putting this strategy to use, it’s important that you understand a few key elements of the Forex markets.

The World’s Three Major Markets

There are a number of financial hubs in the world: New York, Frankfurt, Hong Kong, Sydney, etc. However, three of them clearly stand out as the major exchange centers: London, Tokyo, and New York. Each of these stands as a financial reference point for its part of the world.
But even among these “Big Three” their respective trading volumes differ considerably and, most importantly for us, London has by far the most active Forex market.
Let me throw some figures at you: the volume of Forex transactions processed during London trading hours is typically close to 30% of the world’s total daily volume (or about $580 billion US). New York does a little better than half that, with around 16% ($330 billion US). And finally, Tokyo typically sees about 10% ($210 billion US).


Seeking Volatility... And Finding The Sterling Pound!

So if we’re trying to mimic the stock market’s Open Range Breakout strategy into Forex, we need a candidate currency that’s likely to be volatile early in the trading day.
Let’s enter the GBP (Great Britain Pound or Sterling Pound) into the equation. Typically, this is by far the most volatile major currency. And its main crosses – GBPUSD, GBPJPY, GBPCHF, GBPAUD, GBPCAD and GBPNZD – will routinely pull out larger moves across the board than any other major currency. On any given day, all of the GBP major crosses will usually swing across a range of 150 pips and above. Luckily, we only need to be in position to grab a small portion of that range in order to make a healthy profit and grow our trading account.