Top Traders Unplugged Episode TTU152: "Where is the Open?" ft. Toby Crabel

Host: Niels Kaastrup-Larsen
Guests: Toby Crabel (Crabel Capital), Alan Dunn
Date: April 15, 2026

Episode Overview

In this episode, legendary short-term trading innovator Toby Crabel joins hosts Niels Kaastrup-Larsen and Alan Dunn for an in-depth discussion about the evolution of trading edges, the challenges of today's 24-hour markets, and the profound shifts in market structure over the past four decades. Crabel shares war stories from his transition from pro tennis to the Chicago trading pits, unpacks the demise of opening range breakout strategies, and offers his unique views on technical analysis, strategy robustness, model decay, AI's role in quant trading, capacity, and much more.

Key Topics & Insights

1. From Tennis Pro to Trading Legend (03:01)

• Background:
  • Crabel’s early interest sparked by watching ticker tape with his father.
  • Balance of tennis and market studies through college; began trading options on gold stocks (03:01).
  • Started as a runner at the Mercantile Exchange, gradually moving into technical analysis and short-term trading (03:01–04:54).
  • Became chartist for Tim Brennan at RBH Commodity; later worked for Victor Niederhoffer—considered "foundational" in his career (06:46).

2. The Opening Range Breakout (ORB): Evolution & Demise (07:45)

• Crabel's Seminal 1989 Book:
  • ORB was a momentum strategy that captured market trends after the open.
  • Crabel reflects on the book’s impact and the “golden decade” that followed publication.
• Edge Dissipation:
  • "Where's the open? … There’s so much volume in the 24-hour sessions it’s impossible to determine what the open is." (12:22)
  • The rise of 24-hour trading and electronic sessions weakened the reference power of the open.
  • Strategic liquidity and increased mean reversion now dilute ORB’s effectiveness.

Quote:

"The wonderful thing about open range breakout was… [the open] was the most vital piece of information. … Now, where's the open?"
— Toby Crabel (12:22)

3. Markets Today: What Has Changed? (17:54)

• Market Evolution:
  • Markets are always evolving; portfolios must adapt—Crabel estimates about 10% of his portfolio shifts annually to stay current.
  • Market patterns persist, but greater uncertainty and sharper outlier moves are more common now.
  • Increasing algorithmic participation and large institutional players have shifted market dynamics.

Quote:

"It’s a probabilistic game… The uncertainty… especially in the last few years. So that means that sort of outlier movements can… be a little bit more damaging."
— Toby Crabel (18:35)

4. Liquidity, Execution & Volume Analysis (20:36)

• Intraday Market Structure:
  • Liquidity has migrated from the open to the close, especially in equity indices.
  • Larger traders require liquidity provided by breakouts through previous highs/lows; reversals are more pronounced than before.
  • Discusses a real-time example of huge volume and reversals in silver and gold following news about Iran (20:36).

5. Technical Analysis: Still Valid? (23:38)

• On Price, Volume, and Patterns:
  • Crabel remains a strong proponent of technical analysis, especially chart-based, even as its reputation suffers with some.
  • The human mind still excels at grasping patterns, though quantification is essential to survive changing environments.
  • Volume and effort vs. result (Wyckoff concept) are underappreciated but central to market structure.

Quote:

"There’s a cognitive element here… These vertical bars… have profound elements of information in them."
— Toby Crabel (53:28)

6. The Churn of Model Decay & Robustness (32:45, 36:24)

• Fading Edges:
  • Short-term models face faster decay than longer-term trend-following.
  • Vigilance and ongoing research are crucial: “if we didn’t do that, our five or ten year ago portfolio would have put us out of business.”
• Generalization vs. Precision:
  • Crabel advocates for robust, generalized strategies over highly optimized ones, seeking lasting edge—even referencing strategies from the 1990s that still work (36:24).
  • Execution improvements have become a vital edge as alpha sources decay.

Quote:

"If you optimize too much you're fooling yourself in this systematic area. … We've kind of leaned in that direction since the late 90s, and try to find… very robust strategies."
— Toby Crabel (36:58)

7. The Modern Role of AI in Trading (40:41)

• AI as a Tool, Not a Panacea:
  • Crabel’s firm has embraced modern coding and AI tools for streamlining research, coding, and even back-office processes.
  • Still skeptical about AI’s ability to predict markets:

    "Markets are nonlinear creatures. We deal with imprecision and probabilities only. … Anything can happen in the market." (41:32)

  • Execution, slippage, and adaptability remain more valuable sources of edge.

8. Replicability, Capacity & Competitiveness (43:54, 46:10)

• Replicators Can't Touch Short-Term Nuance:
  • Short-term trading is nuanced, complex, and expensive to execute; replication is unlikely to succeed.
• Capacity Constraints:
  • Capacity estimation is more critical and challenging for short-term than for longer-term strategies due to execution demands and slippage.

9. New Ideas & Enduring Mysteries (47:14, 49:06)

• Pattern Discovery:
  • AI may accelerate discovery, but so far, “it’s so slow, the development.”
  • Price, volume, and volatility remain the core variables, but volume is still a “very deep subject” full of unexplored layers.

10. Macro Regimes and Practicality (54:58)

• On Macro Shifts:
  • Draws parallels to the 1970s: more volatility, inflation hedges like gold and silver in play, big price moves offer opportunity.
  • Short-term returns feel “abrupt,” but volatility and volume are “as dynamic as ever,” giving hope for active traders.

Notable Quotes & Memorable Moments

• On Model Decay & the Pace of Change:
  • “These changes are glacial. … Monroe made a fine living with [ORB] and so did my firm. But there are adjustments that have to be made.” (13:19)
• On Edge & Execution:
  • “Execution in our firm has improved by multiples compared to where we were… 20 or 25 years ago. … If you get that right, that’s how you unleash the edge.” (39:21)
• On AI & Markets:
  • “Pretty soon I’ll be programming, which I’ve always hired for that. But now… all I have to do is tell it what to do, more or less.” (40:51)
  • “Anything can happen in the market. … It’s humbling for a systematic trader, it’s humbling for a discretionary trader.” (41:32)
• On Doing Things Differently:
  • “You seem to be very comfortable doing things… your own way… even wearing a white suit at a conference of black suits!” (57:46, paraphrasing Niels)
  • “Maybe there's an aggressive feature in my personality. … It could also be a level of insanity that you just don't want to have. But there it is.” (60:37)

Timestamps for Key Sections

• 03:01 – 06:46 – Crabel’s route from tennis to trading, early days in the pits
• 07:45 – 14:21 – Opening range breakout: origins, edge, decline, and adaptation
• 15:54 – 20:19 – Liquidity shifts, new reference points, and today’s session dynamics
• 23:38 – 27:11 – Technical analysis, volume, Wyckoff, human intuition vs. computers
• 32:45 – 36:05 – Model decay, allocation, and evolution of strategies
• 36:24 – 38:38 – Robustness vs. precision: why generalization wins
• 39:18 – 41:32 – The critical importance of execution as an edge
• 40:41 – 43:54 – Embracing AI in research, limits of prediction
• 43:54 – 46:10 – Why you can’t replicate short-term models; capacity limits
• 47:41 – 49:06 – Pattern recognition, research bottlenecks, and new data sources
• 51:20 – 53:28 – Effort vs. result; philosophical defense of technical analysis
• 54:58 – 57:27 – Macro regime echoes of the 1970s, trading personal anecdotes
• 57:46 – 62:20 – Personality in trading style, being different, white suits and risk
• 62:20 – 63:22 – Final reflections; invitation for future episodes

Conclusion: Wisdom for Traders in a Changing World

Toby Crabel’s reflections are a masterclass in adaptation, skepticism, and clarity in systematic trading. He offers hard-won perspective on how market structure shifts destroy old edges and the importance of robust strategy construction, relentless research, and first-class execution. The decline in classic “open” based strategies and the increased complexity brought by AI, high-frequency trading, and new products have only heightened Crabel’s conviction: flexibility, humility, and deep engagement with the data—not rigid rules or blind faith in technology—remain the cornerstones of survival and success.

Further Learning

• Check out Toby Crabel’s forthcoming Substack for more insights (visit Top Traders Unplugged for links).
• For foundational reading on short-term and pattern-based trading, seek out Crabel’s original works and research on volume, price, and effort vs. result.

Prepared for anyone building resilient portfolios, allocating to alternatives, or fascinated by how timeless trading ideas are attacked, adapted, and advanced in real markets.