How to trade at Opening of Market?

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 Fantastic Four Setup to Trade at Opening (FAB 4)

it is always a mystery for trader to trade at opening due to uncertainty offer by market. There is no clear trend direction, uncertainty in action of market participants and high volatility contributes to risky trades in opening. So here are FAB 4 setup to trade at opening. 

FAB 4 is a zone which is made out of combination of 4 parameters of previous day market action. when we combine them and extend to next day, we get a zone which helps us to take trading decision.  Those 4 parameters as follow.

  1. Previous day closing price.
  2. Previous day 20 SMA closing.
  3. Previous day 200 SMA closing.
  4.  Last hour trading range of previous day (High and Low of last hour)

Now combine these four parameters and make a zone which is extend to next day till 30 minutes.



How to interpret it -

  • Price open above the zone and retrace to the zone. if any reversal setup formed by candles than go for long position as low of zone as SL.
  • Price open below the zone and retrace to the zone. if any reversal setup formed by candles than go for short position as high of zone as SL.
  • Price open inside the zone. Wait for few minutes and whichever direction price start breaking the zone look for that direction for entering into the trade.


Points to be remember -

  • when 200 SMA is flat, it become very powerful so open above it increases the odds to the long side and open below it increases the odds to the short side.
  • At open 20 SMA lacks sufficient power on its own but combined with 200 SMA it works best. So, if stock open above both then goes for long side or vice versa.
  • Previous Day Close and last hour trading range act as Support and Resistance for next day opening hour.
  • If FAB-4 zone is wide and price open inside it, don't go for it that day after 15 min of trading.
  • Probability is high when stock is moving at open in the direction of larger timeframe trend.
  • Enter only when your entry condition is fulfilled. Don't go blindly after it.
  • SMA is zone not line and look for follow though candles for high probability trades.

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