Reprinted from Technical Analysis of StockS & commoditieS magazine. © 2010 Technical Analysis Inc., (800) 832-4642, http://www.traders.com

Figure 1: typical course module. View nine modules to understand the background and setups for MarketGauge’s opening range trading strategy. After selecting a particular module, click on specific topics in the table of contents to the left. The modules are all narrated with both graphics and text. Controls at the bottom let you pause the presentation as needed.

MarketGauge Opening Range Success Formula

dataView llc70 Sparta Ave, Suite 203Sparta, NJ 07871Phone: 888 241-3060Internet: www.openingrange.com, www.marketgauge.comEmail: (tech support) info@marketgauge.com; (sales) geoff@marketgauge.comProduct: Trading course

Requirements: No special graphics required, but broadband is always helpfulPrice: $1,297 with a 30-day money-back guarantee or Blueprint and one month of Opening Range Mastery; $147 a month, which includes HotScans ($75 a month separately).

by Dennis D. Peterson

pening Range Success Formula, MarketGauge’s new product, is a trading course and mastery

program, with multiple strategies for daytrading equities and commodities. Opening Range Success Formula is based on pattern-based trading strategies. There are two parts to Opening Range Success Formula: the OR Blueprint and OR Mastery. Let’s take a look at each.

OR bluepRintThis is where you learn what Market-Gauge calls its opening range trading strategies. There are nine modules about six hours in length. The Introduction module is basically a synopsis of the trading backgrounds of MarketGauge cofounders Keith Schneider and Geoff Bysshe. The second module, Basic Opening Range Theory, gives you the overall approach. The next six modules give you specific trading pattern setups, such as momentum swing trade with three-day pivots (Figure 1), gapping bulls and bears, and reversal trade. The ninth module is the conclusion. One of the charts in the theory mod-ule provides some interesting statistics. In general, the first 30 minutes of each day establishes the high or low of the day 35% of the time, and in periods of expanded volatility, this percentage tends to rise. Just prior to attending a Las Vegas conference, Bysshe demonstrated this with a brief period, showing that the high and low were established 68% of the time, as annotated on the chart with up and down arrows (Figure 2). The OR Blueprint tab has two sections: The Course and Pre-set HotScans. From the Course titles, you might conclude there are six setups or events to learn. You’ll find there are actually 13 when you choose the Pre-set HotScans. These scans are preset for your convenience and can be customized in many ways. MarketGauge gives you a lot of mate-rial to consider. To help you remember the material, MarketGauge created what

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Figure 2: opeNiNg raNge statistics. The price pattern chart is annotated with up and down arrows where the low of the day, up arrows, or the high of the day, down arrows, occurred within the first 30 minutes. The period chosen established the high or low of the day 68% of the time within the first 30 minutes.

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Reprinted from Technical Analysis of StockS & commoditieS magazine. © 2010 Technical Analysis Inc., (800) 832-4642, http://www.traders.com

it calls a Mindmap (Figure 3) to provide a way of organizing the material. They are the steps you want to go through to maximize your odds of success. One overall approach is identify the most-active stocks in the premarket, then update your watchlist with real-time up-dates after the market has opened. After the market has opened, you want to get an idea of the general market direction. MarketGauge suggests using Spy (Stan-dard & Poor’s 500), dia (Dow Jones Industrial Average), QQQQ (NaSdaQ 100), and iwN (Russell 2000), and look for times when all four are moving in the same direction or find a situation where three are showing the same behavior and the fourth is divergent in a way leading the other three. Three might be showing a bottoming pattern, for example, while the fourth has moved off its lows and is headed up. Sectors refer to the usual suspects, and MarketGauge’s HotScans web-based dynamic tool product can help with a beta product you can use to see which industry groups are the most active and what direction they’re going. Your time horizon will affect how long you stay in a trade and the period of your price bars — for example, daily versus five-minute bars. If you are trading five-minute bars, it’s not likely you’ll be holding any posi-tions open overnight, or if you just want to trade before you go into work in the morning.

OR bluepRint (techniques)As you go through the individual courses, you’ll become aware of what MarketGauge refers to as reference points. These are three pairs of lines, all related to opening range, six lines in total since there is a high and a low for each. The one you might not be familiar with is the three-day pivot. Basically, it smoothes the data by using a midpoint calculated from a three-day range bar, then calculates the high and low using the difference between the midpoint of the range and a three-day range bar midpoint. If this sounds confusing, an easier way to understand is to look at the Excel calculation that MarketGauge supplies. Figure 1 gives an illustration of the

opening range is like other trading strategies that have strong success records with its heavy reliance on patterns.

Figure 3: opeNiNg raNge miNdmap. To help with organizing the material, MarketGauge has created a series of elements that let you put material you learn into different buckets. Note that, independent of the time of day, you still want to scan for the most active, understand general market direction, and then recognize what type of trading you can support — that is, a full-time trader scalping versus a part-time swing trader.

Figure 4: price cHart witH reFereNce Values. Six lines, where green is for high and red for low, are used to analyze price behavior: dashed lines are for a 30-minute opening (the red dashed line is under thicker green line), nonlabeled solid lines are for yesterday’s range, and labeled lines are three-day pivot values. The MarketGauge dialog that might go with the chart would be something like: (1) prices move up, then consolidate at the opening range high (white rectangle); (2) a wide range bar is the breakout above the bars leading into the consolidation; (3) the 30-minute opening range high, and (4) checking the SPY at 8:15 am toward the end of the consolidation shows weakness, and therefore, this stock is showing strength.

principle: when prices are in a trend, say an uptrend, look for prices to move above the reference line pivot high. The three-day pivot high would be the entry point. The underlying principle that Market-Gauge follows is to look for a breakout

of prices from a consolidation pattern and that then moves above one of their key reference points (the three-day pivot high, when you are in an uptrend, or below the three-day pivot low if in a downtrend, is an example). Figure 1 illustrates this point by showing prices

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Reprinted from Technical Analysis of StockS & commoditieS magazine. © 2010 Technical Analysis Inc., (800) 832-4642, http://www.traders.com

feed is in the works to provide real-time alerts from Bysshe and Schneider. All the live and video training is archived and include such topics as volume-weighted average price (Vwap), using volatility index (Vix), and floor trader pivots OR.

summaRy My friends often ask what I think the market is going to do. If I were to ask Schneider and Bysshe, I would pay at-tention to the answer. And that is what you get with the mastery program. Opening Range is like other trading strategies that have strong success records with its heavy reliance on pat-terns. Both Bysshe and Schneider trade every day. You can’t do this for 20 to 30 years and still have any money if you aren’t successful. Try this product. You’ll like it.

Dennis Peterson is a Staff Writer for StockS & commoditieS.

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breaking above the green dashed line while in an uptrend. Market action that breaks above (or below) is significant, and hence, they are referred to as refer-ence lines because price action often reflects or refers to them. If you ask how MarketGauge determines whether prices are in a trend, the answer is that they advise using the slopes of the 10-, 20-, and 50-day simple moving averages (Smas) and whether the Smas are stacked one above another. To help create price charts with these reference lines (Figure 4), you can go to www.marketgauge.com/TS for the TradeStation code. They also have a chart template you can download for TradeStation as well. Use TradeStation 8.6 or newer to get the code and template imported. The type of MarketGauge narrative to analyze the price action is given in the Figure 4 caption. The very last step in the caption is as important as the first three. If you recall the discussion about Mindmaps, one of the steps is to check the overall market conditions.

An example of the care that has been given to this course is that price action relative to reference lines has its origins in the second module, Basic Opening Range Theory, where “Trading the line” is discussed. The narrator doesn’t give you specific details of the line, only that it is support/resistance.

OR masteRyAfter completing the course, it’s time to put what you know to work. For support, the OR Mastery program provides six hours of prior live seminars provided to mastery participants. In addition, there is a forum for all participants, with regular messages left by Bysshe and Schneider to guide you in your trading. Schneider’s message is about overall market condi-tions such as whether the market is overbought or oversold, while Bysshe’s is oriented toward HotScans screens you will want to consider. There is a live seminar once a month, and twice-weekly training videos with a monthly theme. Plus, a private Twitter S&C