Trading NR7 setup
- Thread starter AW10
- Start date
- Tags narrow range nr 7 nr4 option trade
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Vijay,
Here is the updated file. I have created the copy of your BTesting sheet and modified it. The Original copy is the last sheet, where I have placed comment in column N.
Change made in the sheet are
1) Transferred the part of your strategy to appropriate section between row 3 to 20
2) Delete rows where there was no trade. You can find the rows that I have deleted from my comments in last sheet.
3) Cell Formatting correct in statistics section and in column K
4) Changed formula in Cell C24 to count trades from column I which is also used to count winner/looser.
5) Manually counted consecutive win/loss to understand the outcome correctly.
6) Changed IF condition in formula of column I/J and replaced "S" by "sell".
Because of these changes the total profit in points have come down to 1068. Here are my observations/interpretation
0) Has +ive expectancy of 22 points over a period of time. Even if I remove the best winning trade of 153 points, the expectancy remains +ive at 18.7 points.
When I remove 2 best winner 153 and 144 points, Expectancy is +15 points.
So even if you miss those dream runs, you are not going to loose money trading with this approach.
1) Average winning % is 62% .. so psychologically, u are expected to see more winners then looser.
Possible to get 4 consecutive loosers. Except in one case we got 4 loosers, else it is not more then 2 loosers in a row.
2) The strategy is giving decent average win in points = 39 pts whereas size of average loosing trade is 5/6 points.
3) Max stoploss or max risk is 100 points+ on one trade.. but on an average you are risking about 38 to 40 points.
Your average win size is 39 pts.. i.e. your average reward risk ratio of approx 1..
Strategy is profitable due to higher % win in your favour.
4) If you just look at best and worst case scenario.. then best profit was 153 points.. whereas worst loss was 36 points.
5) you are getting 35 trades in a years time, i.e. approx 3 trades per month.. Which fits well with my analysis about frequency of NR7 signal.
6) Good point of your approach is that you are booking partial profit at 50 pts. And also carrying the position to next day when odds are in your favour.
You can make it more profitable by changing you position sizing approach. i.e. ride the winner aggressively.
The approach that u are using to book partial profit, results in riding winner conservatively. In this approach, when market is proving trader right, he steps back and cuts the position.
As you know your average risk of 38 /40 points, so plz chk out if you can scale into the position intraday when it is going in your favour after first entry. Say when it is up by20/25 points, you wait for retracement and scale in there. And follow with 40 points trailing stop. You may also decide to take first scale-in entry only and then keep taking out position at 50 points, 70points etc.
It is not as simple as I have written. but if it is analysed and done correctly, it can boost your returns.
Feel free to raise more doubts on this, if you have any.
All the best and Happy trading
Link to Update file is in the post below by Rohan.
Here is the updated file. I have created the copy of your BTesting sheet and modified it. The Original copy is the last sheet, where I have placed comment in column N.
Change made in the sheet are
1) Transferred the part of your strategy to appropriate section between row 3 to 20
2) Delete rows where there was no trade. You can find the rows that I have deleted from my comments in last sheet.
3) Cell Formatting correct in statistics section and in column K
4) Changed formula in Cell C24 to count trades from column I which is also used to count winner/looser.
5) Manually counted consecutive win/loss to understand the outcome correctly.
6) Changed IF condition in formula of column I/J and replaced "S" by "sell".
Because of these changes the total profit in points have come down to 1068. Here are my observations/interpretation
0) Has +ive expectancy of 22 points over a period of time. Even if I remove the best winning trade of 153 points, the expectancy remains +ive at 18.7 points.
When I remove 2 best winner 153 and 144 points, Expectancy is +15 points.
So even if you miss those dream runs, you are not going to loose money trading with this approach.
1) Average winning % is 62% .. so psychologically, u are expected to see more winners then looser.
Possible to get 4 consecutive loosers. Except in one case we got 4 loosers, else it is not more then 2 loosers in a row.
2) The strategy is giving decent average win in points = 39 pts whereas size of average loosing trade is 5/6 points.
3) Max stoploss or max risk is 100 points+ on one trade.. but on an average you are risking about 38 to 40 points.
Your average win size is 39 pts.. i.e. your average reward risk ratio of approx 1..
Strategy is profitable due to higher % win in your favour.
4) If you just look at best and worst case scenario.. then best profit was 153 points.. whereas worst loss was 36 points.
5) you are getting 35 trades in a years time, i.e. approx 3 trades per month.. Which fits well with my analysis about frequency of NR7 signal.
6) Good point of your approach is that you are booking partial profit at 50 pts. And also carrying the position to next day when odds are in your favour.
You can make it more profitable by changing you position sizing approach. i.e. ride the winner aggressively.
The approach that u are using to book partial profit, results in riding winner conservatively. In this approach, when market is proving trader right, he steps back and cuts the position.
As you know your average risk of 38 /40 points, so plz chk out if you can scale into the position intraday when it is going in your favour after first entry. Say when it is up by20/25 points, you wait for retracement and scale in there. And follow with 40 points trailing stop. You may also decide to take first scale-in entry only and then keep taking out position at 50 points, 70points etc.
It is not as simple as I have written. but if it is analysed and done correctly, it can boost your returns.
Feel free to raise more doubts on this, if you have any.
All the best and Happy trading
Link to Update file is in the post below by Rohan.
Last edited:
http://rapidshare.com/files/295030414/NR7Backtesting_sheet_-_Vijay_Modified.xls.html
Here is the link to download the specific file.
Here is the link to download the specific file.
Amrut,
It is personal choice.. No standard rule.. but it depends on what we belive in.
With due respect to all emotional factors, yes, 17th was a trading day.
But if you focus on real trading oriented facts then, volume was low, institutions were absent, it was not a regular trading day. So it is likely that this data will distort your regular view of the market.
Becuase of these reasons, I would prefer not to consider 17th data in my analysis. (but people may disagree with me..and it is fine. They are not wrong but just have different belief then mine)
We had NR7 day on Friday.. that too Inside day.. Market has broken upside today at open but could not hold there and it is back to the range of NR7 day/friday. We have already seen range of 63 points compared to friday's 56 pt range. If it drops below 5093, candlestick followers will jump tomorrow after seeing bearish engulfing picture on chart.
This will also be clasic reversal bar where market makes a new high but closes at lower end of the day.
Hopefully we will see further expansion in next few days.
Happy Trading
It is personal choice.. No standard rule.. but it depends on what we belive in.
With due respect to all emotional factors, yes, 17th was a trading day.
But if you focus on real trading oriented facts then, volume was low, institutions were absent, it was not a regular trading day. So it is likely that this data will distort your regular view of the market.
Becuase of these reasons, I would prefer not to consider 17th data in my analysis. (but people may disagree with me..and it is fine. They are not wrong but just have different belief then mine)
We had NR7 day on Friday.. that too Inside day.. Market has broken upside today at open but could not hold there and it is back to the range of NR7 day/friday. We have already seen range of 63 points compared to friday's 56 pt range. If it drops below 5093, candlestick followers will jump tomorrow after seeing bearish engulfing picture on chart.
This will also be clasic reversal bar where market makes a new high but closes at lower end of the day.
Hopefully we will see further expansion in next few days.
Happy Trading
Sir,
as of now mkt is weak and in bearish mode,
so if we see mkt making low below 5093, one can take short position on nifty with todays high as stoploss 5170-5175 and ride the rally as the breakout will be on downside.
by 3.15 we can get more clear picture weather nifty is in range or trying to break on either side.
as of now mkt is weak and in bearish mode,
so if we see mkt making low below 5093, one can take short position on nifty with todays high as stoploss 5170-5175 and ride the rally as the breakout will be on downside.
by 3.15 we can get more clear picture weather nifty is in range or trying to break on either side.
Yes Rohan, that's how I would have traded this reversal (atleast for next 1 day) on the break of 5093.
As today mkt closed within Friday's range.. so we have to wait for next bar..
Today was the second time when upside break of NR7 was sold out and price reversed to the trading range of NR7.
Hope we are listening to what market is telling us.
Happy Trading
As today mkt closed within Friday's range.. so we have to wait for next bar..
Today was the second time when upside break of NR7 was sold out and price reversed to the trading range of NR7.
Hope we are listening to what market is telling us.
Happy Trading
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