Trading NR7 setup

[mdrafi67]

Just initiating this thread to discuss possible expansion setup

1) What is NR7 pattern (Narrow Range 7) ?
Market goes thru regular contraction (i.e. daily trading range getting shorter and shorter) and expansion (i.e. daily trading range getting bigger) cycle. Expanding range is followed by Contraction and vice-versa. So if we can indetify the narrow range days, then it give us a step ahead of everybody to benefit from coming expansion.

NR7 is term given to a day that has the daily range smallest of last 7 days including that day.

NR4 is variation of this where the lookback period is 3 days + current day i.e. 4 days.
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[B]Date	         High            Low             Range	Remark[/B]
27-May-09	4,286.45	4,115.25	171.20	
28-May-09	4,354.85	4,254.85	100.00	
29-May-09	4,488.05	4,340.75	147.30	
1-Jun-09        4,545.40	4,450.40	95.00	NR 4 day. Range smallest of last 7 entries from 28/May till today i.e. 1-Jun )
2-Jun-09	4,586.40	4,453.40	133.00	
3-Jun-09	4,574.90	4,478.60	96.30	
4-Jun-09	4,582.20	4,453.45	128.75	
5-Jun-09	4,636.85	4,561.95	74.90	NR 7 day. Range smallest of last 7 entries from 28/May till today i.e. 5-Jun )
				
8-Jun-09	 4,611.40	4,404.65	206.75	Break of the low of 4561 of NR7 day took it to low of 4365 in next 2 days.  Notice the range expansion (206+197 points).
9-Jun-09	 4,562.45	4,365.10	197.35

As far as I know, this setup was discussed by Toby Crabel first. Later Linda Raschke has also discussed this in her book "The street smart". To know more about them you can either refer to these sources or raise questions here and I /other members here will try to clarify it.

Happy Trading.

How to Find NR7 day..

1) Get the High and Low data of last few period
2) Calculate the range of each day i.e. high - low) for each day
3) Compare the range of a today and previous 6 days range (to get NR7. To get NR4 get last 3 days range)
4) If todays range is smallest of all 7 days, then today is NR7 day..else not.

It is that simple.

note - This thread is about NR7 SETUP, it is not a complete trading system (though I have given ideas about how to develop a trading system using this setup). Refer to following post to understand the difference between SETUP and TRIGGER.
http://www.traderji.com/swing-trading/40202-trading-ranges-3.html#post439859

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hi,
thanq very much for some informative post. i hope it has helped many traders here. sir i would like to ask u , does this strategy applicable for commodities as of now i was paper testing the NR5 strategy and still on the testing stages from the past recent times......can i use this NR7 strategy and back test it.........have u ever tried it on commodities if so under any conditions and along with anyother strategy...........pls reply.........happy to learn n know from u........once again thank u:thumb:

 

[mdrafi67]

I was searching for Nr7 in my saved charts/data and in most charts the nr7 stood out like it was begging to get noticed. The reason i posted this chart is because we had two nr7 bars with opposite meanings and opposite implications on bank balance.

For a minute i will be stepping out of VSA/Wyckoff and MP. The aim will be to try to look at nr7 bars in isolation. We have rising prices with increasing volumes and 90% of the technical analysts would say that price will continue to rise further and then Bar A is our entry point for going long as now we have a bargain price to go long. I really don't know how a technical analyst would analyze bar b but i'm sure that most probably its not going to be correct.

Now lets combine VSA/Wyckoff/MP and Nr7. Early in the day weakness was spotted in the background and transfer of ownership started as the professional money began to dump their holding to the weak holders. MP indicated that an extension was due as time hit the initial balance period. A few hours after that we have a nr7 bar which shows no supply but the background is weak so we do not enter long. Later in the day weakness started growing and then we have our popular no-demand bar which took out the low of the day. Nr7 used in conjunction can be and will be very rewarding.

Sorry to say this but the only thing i have derived so far is that in isolation if the nr7 is traded then you might as well take all your savings and dump them in a river in partly installments unless. There is an exception to this which could make isolated nr7 profitable: Book Profits at a small gain and use extremely tight stops and trailing stops.

This is my conclusion as of now. Any criticism or feedback is welcome.

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hi,
this was a good one placebo...thanks for sharing............if u can elobrate a little bit about the chart so that we can benefit from it. Myself also working NR5 on commodities just paper testing it............but getting some mixed results.........i think that i'm missing something beneath the strategy so unable to find it profitable.....its 50-50 kind of thing right now if few more people through some light or share their experience on NRX theory on commodities will be more helpful for all.............once again thanq keep going.......cheers!!!!!!!!!!!!!!!!!:thumb:

 

[AW10]

---------------------------------------------------------------
hi,
thanq very much for some informative post. i hope it has helped many traders here. sir i would like to ask u , does this strategy applicable for commodities as of now i was paper testing the NR5 strategy and still on the testing stages from the past recent times......can i use this NR7 strategy and back test it.........have u ever tried it on commodities if so under any conditions and along with anyother strategy...........pls reply.........happy to learn n know from u........once again thank u:thumb:

mdrafi67, NR7 setup is based on basic concept of market behavior, i.e. cycle of consolidation and expansion. I don't see any reason why it should not work on Commodities. In some cases anything greater then NR4 will be fine. Some commodities are sensitive to news events (like weekly crude oil inventory report on wednesday in US market etc). So you might like to make some adjustements in your approach (eg find out the result if Nr7 is on Tuesday, and when NR7 is not on Tuesday). Similary, some commodities are relatively illiquid, so be careful in trading them with this setup.
If you backtest then your result will tell you the suitable candidates and suitable additional patterns/conditions to trade it.

Personally, I use this setup to filter my target instrument in trading on Index, Commodities, Currencies and other etfs.

Hope this helps
Happy trading

 

[trade4joisar]

Today was NR7 setup.

Have a close look @ 5017-5062

 

[angira]

hello AW sir & all friends..
today nr7 triggered for tatapower(pre.high 1000, low 986.15...nse)
i've entere@998 and exited@1009, today' high 1010.90.
nice trade.
this is my second nr7 profitable trade with tatapower... in this month also nr7 trigerred for tatapower at 13-sept.

thx sir.....

 

[AW10]

After 49 points NR7 day on 19-sept, we had 114 points range on 20th.
Market paused yesterday with another NR day of 59 points range, which cracked today and shown 2+% move. though the intraday range is still not much today around 50 points by mid day. Lets see what comes by close time.

happy trading.

edit - by end of the day that range was almost 140 points.

 

[trade4joisar]

After 49 points NR7 day on 19-sept, we had 114 points range on 20th.
Market paused yesterday with another NR day of 59 points range, which cracked today and shown 2+% move. though the intraday range is still not much today around 50 points by mid day. Lets see what comes by close time.

happy trading.

Hello AW10,

Thanks.

What do you mean by "NR day of 59"?

Anything which i am missing with NR7 setup?

 

[gambler]

NR day of 59 means 59 points....

Hello AW10,

Thanks.

What do you mean by "NR day of 59"?

Anything which i am missing with NR7 setup?

 

[Rishi001]

After 49 points NR7 day on 19-sept, we had 114 points range on 20th.
Market paused yesterday with another NR day of 59 points range, which cracked today and shown 2+% move. though the intraday range is still not much today around 50 points by mid day. Lets see what comes by close time.

happy trading.

Thanks AW,

Generally a NR day is followed by a range of 100+ points since we have only had a range of around 75 points (in down direction), I am expecting another 25-30 odd points fall from here.

Depends on how the european markets trade, lets see

Regards,

 

[AW10]

We ended with 140 points range for today. Western market is bleeding, and quite likely we are going to have lower low tomorrow.

Again another strong setup from Toby Crabel (called 90-10 setup) appeared today. The selling is not yet over, hence market closed in bottom 10% range of the market. This selling will push mkt to lower low, and if more selling enters the market then we will end lower. But if that doesn't happen, then we might see small bounce from already oversold market (275 points in 2 days, what else a short term trader wants before collecting the profit and waiting to reshort around 5000 level).

Happy trading.