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2019issue C039

A same-session opening-range breakout with a whole-number stop and scale-out

The documented procedure is a same-session hold: it opens in the first trading hour and closes remaining size before the session ends. The long uses a minor opening gap, a buy stop-limit above a whole-number premarket high, a precommitted whole-number stop, and a two-stage scale-out.

  • A same-session hold opens during the first trading hour and closes any remaining size before the regular session ends, so overnight gap risk is excluded by design.
  • The scan is a minor opening gap of less than 10 percent, and the long is entered with a buy stop-limit 0.50 above the nearest whole-number premarket high.
  • The whole-number stop is 0.50 below that same whole-number price, with the premarket low as an alternate test.
  • The documented scale-out closes half the winning position on the first pullback and holds the rest until just before the closing bell.
Entries in this reading3 entries
Current trackScale-out position reduction22 readingsOpening range breakout35 readingsStop-loss order297 readings

A same-session hold

The documented procedure is a same-session hold. The long is opened during the first trading hour, and any remaining size is closed before the regular session ends, so the position is not held overnight.

The scan filter is a minor opening gap: an upward gap at the open of less than 10 percent, used to look for continuation attempts.

The opening-range trigger

The opening-range breakout is a long triggered 0.50 above the nearest whole-number premarket high after the opening range begins to form. That offset is intended to skip false breaks that often occur in the first 0.20 above the opening high, the false-breakout buffer.

Entries in the documented procedure are placed with buy stop-limit orders. A buy stop-limit buys only after price clears the trigger, with a cap on the acceptable fill.

The whole-number stop

The whole-number stop is an initial protective stop placed 0.50 below the same whole-number price used for the entry trigger. An alternate test uses the premarket low as the stop.

Scale-out after an early trail

The documented execution error is tightening a trailing stop after an early gain of 0.80 per share within 10 minutes and exiting the trade too soon.

The documented corrective exit is a scale-out. Half of the winning position is closed on the first pullback, and the remaining half is held until just before the closing bell.

Classic opening-hour breakouts are described as often traveling only 0.30 to 0.80. That contrast is what motivates holding a confirmed move through the rest of the session.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
16 of 18 in the Scale-out position reduction track
201948-49 pp.Next on Scale-out position reductionGrade the first seasonal long-put gain as a maintenance examAfter a seasonal long-put has already paid October and November weakness, leaving the contracts unchanged still exposes both the original debit and the open gain to a rally.
All readings on this track · 18 readings
  1. 1989One add option sizing with a scale-out and a trail
  2. 1991Precommit scale-outs and puts to replace impulse
  3. 1991A written game plan for checklist, scale-out and staggered stops
  4. 2004Name the stop, require a 1:3 reward, then scale out half
  5. 2005Why pre-target scale-outs lower expected value
  6. 2008Preplanned butterfly exits with stops and scale-outs
  7. 2010Qualified trend, volume breaks, and a staged scale-out
  8. 2011Gated entry and scale-out after a climactic selloff
  9. 2011First-target review: scale out or flatten
  10. 2012Tiny scale-out as a systems decision test
  11. 2014Written size and exit scripts for scaling and risk
  12. 2017Constructing livable scale-out exit rules
  13. 2017Why the simpler looking system is harder to run
  14. 2018Prewritten scale-out and exponential moving-average exit procedure
  15. 2019A dual-career swing procedure that must output entry, scale-out, or abstention
  16. 2019A same-session opening-range breakout with a whole-number stop and scale-out
  17. 2019Grade the first seasonal long-put gain as a maintenance exam
  18. 2019Failed candlestick fades with breakout permission and scale-out
By fieldEntry and exit rules327 readingsBy year2019140 readings
All 22 readings tagged Scale-out position reduction
Also on Scale-out position reduction5 readings
1991A written game plan for checklist, scale-out and staggered stops2004Name the stop, require a 1:3 reward, then scale out half2008Preplanned butterfly exits with stops and scale-outs1989One add option sizing with a scale-out and a trail1989Shorter series need fewer recovery hits and raise scale-in cash