Ten dollars is the cost of the data feed. The methodology recorded at orb trading entries leavenly relies on specific calculations to measure range expansion. Measuring the ratio between an opening range and the projected daily range requires precise math during the first hour of regular trading hours. Data from an orb provides the foundation for these calculations.
The Expansion Ratio Formula
The math starts with a simple division. The size of the opening range is the denominator. The projected daily range is the numerator. If a stock has a five minute range of two dollars and the historical volatility suggests a daily range of ten dollars, the ratio is five. This number indicates how much room remains for price movement. A low ratio suggests the expansion phase is still active. A high ratio suggests the move is nearing exhaustion. A small sample overstates the edge. Large datasets provide better clarity on how the ratio behaves during the cash open.
Setting the Timeframe
Selection of the timeframe changes the output. A fifteen minute range offers a different ratio than a sixty minute range. The thirty minute range acts as a middle ground for many mechanical systems. Using a 5 minute candle to define the initial volatility often leads to noise. The first fifteen minutes of the session provide a high volatility window that can skew the ratio if the volume is not sustained. The calculation must remain consistent across every session high and low recorded. Accuracy depends on using the exact high and low of the chosen period.
Volatility and Projection
Projecting the daily range requires looking at the premarket movement and the average true range. The premarket session sets the stage for the volatility expected during regular trading hours. If the pre market range is tight, the expansion ratio will likely be higher once the market open occurs. A breakout from the opening range breakout zone signals the start of the expansion. The ratio tracks whether the price has already consumed its expected movement. When the ratio approaches one, the probability of further expansion decreases.
Execution Mechanics
Mechanical execution avoids the errors of manual estimation. The ratio is calculated immediately after the chosen period closes. For a 30 minute setup, the math is performed at the close of the second candle. The ratio determines whether a position has enough room to reach a target. A position taken when the ratio is already at zero point eight lacks the mathematical room for profit. The session high often acts as the limit for the expansion. Calculations must be repeated every day to maintain a clean log of the intraday results.