Trading NR7 setup

[vibhunair]

Today was an inside NR7 day in JP Associates. Lets see how it plays out tomorrow...

 

[AW10]

It is not just NR7, but it has also shown 2 inside days in continuation. 2-IDNR is another strong contraction pattern that doesn't come so often. (US Index S&p500, had shown 2-IDNR day before yesterday, and it fell by 1.9% yesterday).

If you observe slightly longer timeframe picture, it has been showing contraction in triangle form. As the trend is down on this chart, looking at bearish sentiment of market, any short trade will have higher probability of success.. With this breakground, I will be inclined to look at short breakout on this. In attached chart, I have given entry, stop, and possible targets for short trade.
That doesn't mean we can't have upside breakout, but chances of success on such breakout are limited.

Hope this helps. Happy Trading.

Uploaded with ImageShack.us

 

[rkkarnani]

It is not just NR7, but it has also shown 2 inside days in continuation. 2-IDNR is another strong contraction pattern that doesn't come so often. (US Index S&p500, had shown 2-IDNR day before yesterday, and it fell by 1.9% yesterday).

If you observe slightly longer timeframe picture, it has been showing contraction in triangle form. As the trend is down on this chart, looking at bearish sentiment of market, any short trade will have higher probability of success.. With this breakground, I will be inclined to look at short breakout on this. In attached chart, I have given entry, stop, and possible targets for short trade.
That doesn't mean we can't have upside breakout, but chances of success on such breakout are limited.

Hope this helps. Happy Trading.

AW, Came to this thread after a long time. So nice to see you continuing as usual to give your "time" (a rare commodity) for others.
Thanks for this input. My observation is that a few scripts give more IDNR or NR7 patterns than average. In JPA I find it gives more IDNR patterns than normally we get to see... just see (In JPA cash) : 22 Sep is IDNR-8 (A rare thing I saw, rather seeing it fo the first time) on 19th Nov its IDNR-4, again on 26th November and 27th Dec we get IDNR-4 and was surprised to see a IDNR-8 again on 17th Jan. So do you think it is advisable to give much importance to IDNR 2 (I term it as IDNR-3, may be am wrong) in such a stock?

 

[AW10]

Thanks for your observation RKK. I did not notice that type of bahaviour in this stock.
But you have made very valid observation. Each stock has its own behaviour that we should take into account. From that perspective I agree with you that, IDNR-2 is no big deal for this stock. Maybe we can keep it as extra info which might give additional edge to the trade.

I mainly trade indices and it is difficult to see such frequent observation of IDNR-2 or greater on them.

Happy Trading

 

[rkkarnani]

Thanks for your observation RKK. I did not notice that type of bahaviour in this stock.
But you have made very valid observation. Each stock has its own behaviour that we should take into account. From that perspective I agree with you that, IDNR-2 is no big deal for this stock. Maybe we can keep it as extra info which might give additional edge to the trade.

I mainly trade indices and it is difficult to see such frequent observation of IDNR-2 or greater on them.

Happy Trading

AW, I also track and trade Indices and primarily Nifty Futures hence agree with you. Moreover I take note of only IDNR4 bars (Inside bar with 3 more bars within same range, you will call it probably IDNR3), they are quiet powerfult to trade.

 

[ashutosh.krsrivastava]

Sujit,

Amibroker Library is now for the registered users


_SECTION_BEGIN("NR4 Historical Volatility System");
//------------------------------------------------------------------------------
//
// Formula Name: NR4 Historical Volatility System
// Author/Uploader: Daniel Ervi
// E-mail:
// Date/Time Added: 2001-09-08 17:28:09
// Origin: Street Smarts, Connors and Raschke. Also featured in TASC.
// Keywords: NR4 volatility
// Level: medium
// Flags: exploration
// Formula URL: http://www.amibroker.com/library/formula.php?id=115
// Details URL: http://www.amibroker.com/library/detail.php?id=115
//
//------------------------------------------------------------------------------
//
// Connors and Raschke NR4 Historical Volatility System. Compares the 6 day
// volatility to the 100 day volatility. When this ratio drops below 50%, a
// buy stop and sell stop bracket the current price, expecting historical
// volatility to revert to the mean. Four day Narrow-Range (NR4) and Inside
// Day patterns are used to filter the trades to increase probabilities. For
// further explanation, refer to "Street Smarts" from Connors and Raschke.
//
//------------------------------------------------------------------------------

/* Connors and Raschke Historical Volatility System
For further explanation, refer to "Street Smarts"
from Connors and Raschke.
Ported from Metastock code by Daniel Ervi */

//NumColumns = 5;
SetChartBkGradientFill( ParamColor("BgTop", colorLavender),ParamColor("BgBottom", colorBlack));
_SECTION_BEGIN("Price1");
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );
_SECTION_END();
VolRatio = StDev(log(C/Ref(C,-1)),5) / StDev(log(C/Ref(C,-1)),99);
Column0 = VolRatio;
Column0Name = "VolRatio";

NR4Day = (H - L) < Ref(LLV(H-L,3),-1);
//Column1 = NR4Day;
//Column1Name = "Nr4Day";
NR7Day = (H - L) < Ref(LLV(H-L,6),-1);

InsideDay = H < Ref(High,-1) AND Low > Ref(Low,-1);
Buy = VolRatio < 0.5 AND (NR7Day == 1 AND InsideDay == 1);
Sell = VolRatio < 0.5 AND (NR7Day == 1 AND InsideDay == 1);

//shape = Buy * shapeSmallCircle + Sell * shapeSmallCircle;
//PlotShapes( shape, IIf( Buy, colorBrightGreen, colorRed ),0, IIf( Buy,High,Low ) );

dist = 2.0*ATR(10);
for( i = 0; i < BarCount; i++ )
{
if( Buy ) PlotText( "NR7Buy\n@" + H[ i ], i, H[ i ]+dist, colorGreen );
if( Sell ) PlotText( "NR7Sell\n@" + L[ i ], i, L[ i ]-dist, colorRed);
}

//Column2 = InsideDay;
//Column2Name = "Inside Day";

//Column3 = High + 0.125;
//Column3Name = "Buy Stop";

//Column4 = Low - 0.125;
//Column4Name = "Sell Stop";

Filter =VolRatio < 0.5 AND (NR4Day == 1 AND InsideDay == 1);
Buy = Filter;
//AddTextColumn(FullName(), "Company Name");
AddColumn(Buy, "Buy", 1);
AddColumn(C, "Close", 1.3);
AddColumn( VolRatio, " VolRatio");
AddColumn(Nr4day, "NR4day");
AddColumn(Nr4day, "NR7day");
AddColumn(InsideDay, "insideday");
AddColumn( High + 0.125, "BuyStop");
AddColumn(Low - 0.125, ",SellStop,");
Regards
Ken

buy and sell are same..
can u clarify it pls
regards

 

[Karanm]

Sir, Kindly provide MetaStock Explorer formula for exploring NR7 Stocks.
Thanks for your help & Guidance.

 

[AW10]

lont time back, Swaminathan had contributed metastock explorer for NR7. I have given the link in post 5 of this thread.

Giving it here again.

http://www.traderji.com/advanced-trading-strategies/29825-trading-nr7-setup-30.html#post361639

Hope that will answer your query. Personally I don't use MetaStock so will have to depend on other members for solution.

happy trading

 

[hiren7202]

Hello AW10

I am trying to understand your strategy..... I am putting here the data of tata motors for last 15 days. Will you please give your view in your reply ?


Date High Price Low Price Daily Range
23-Mar-11 1144.7 1126.05 18.65
24-Mar-11 1161.9 1145.2 17.1
25-Mar-11 1191.9 1161.3 30.6
28-Mar-11 1227.9 1189.4 38.5
29-Mar-11 1246 1212.5 33.5
30-Mar-11 1258.7 1238.6 20.1
31-Mar-11 1260.9 1221 39.9
01-Apr-11 1249.9 1234.35 15.55
04-Apr-11 1258 1237 21
05-Apr-11 1284.9 1244.05 40.85
06-Apr-11 1303.7 1278.35 25.35

What can be done with the coming days in tata motors ????????

Thanks
Hiren Thakker.

 

[vijayinvitesk]

Awesome thread. Got to know a lot.