Trading NR7 setup

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WOD

Well-Known Member
Bunny bro, I have studied those candelstick patterns before; and I do check for those patterns on intraday and daily charts...though not possible for me to look for these candelstick patterns in RT
 
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AW10

Well-Known Member
Hope you have noticed the development of second consecutive NR7 day today.
Pattern that is rarely visible.. 2day- NR7..

So get ready for breakout.. And best way to play this will be to go long with direction neutral strategy like
Buy - Straddle or Buy Strangle. July 4500-4600 strangle is available in 80 Rs or so and Aug 45-4600 strangle in 334 Rs.

Lets see what market is going to do in next few days..

Happy Trading.
 

WOD

Well-Known Member
Hope you have noticed the development of second consecutive NR7 day today.
Pattern that is rarely visible.. 2day- NR7..

So get ready for breakout.. And best way to play this will be to go long with direction neutral strategy like
Buy - Straddle or Buy Strangle. July 4500-4600 strangle is available in 80 Rs or so and Aug 45-4600 strangle in 334 Rs.

Lets see what market is going to do in next few days..

Happy Trading.
Yup AW, tommorow would be BO day....most probably a green day(I have observed lot of supporting technicals and would post them tonight)....
 

Satyen

Well-Known Member
Hope you have noticed the development of second consecutive NR7 day today.
Pattern that is rarely visible.. 2day- NR7..

So get ready for breakout.. And best way to play this will be to go long with direction neutral strategy like
Buy - Straddle or Buy Strangle. July 4500-4600 strangle is available in 80 Rs or so and Aug 45-4600 strangle in 334 Rs.

Lets see what market is going to do in next few days..

Happy Trading.


Thanks will b watching it for my 60 min trade
 

Satyen

Well-Known Member
You are right. We can't check our P&L with each trade.. I generally check it on day-end / weekend / monthend frequency.. Though the scope of P&L review varies.
These frequencies are required for me cause i have keep tab on my daily/weekly/monthly loss limits and stop trading for few days, if required
I am trying to find out total no trade should give profit around a NR7 day using 60 min flow trading so once get NR7 or other Indecision pattrn we trade 60 min flow for ome time

Hope you have found NRx as nice simple way of anticipating trending days ahead. IMO, there are 3 types of GAPs and hence market behaviour after the gap depends on what part of trend they have
occured. Moreover, presence of Gap already indicates that sentiments are stretched or getting stretched. i..e we are already in trend.
Maybe use of Bollinger Band / ATR range comparision to anticipate the breakout from expansion.
Ye it is very important what part of trend we have gap i trade gap as separate plan

As I posted yesterday, each timeframe has its typical range.. so if we do some datacrunching, we can find out the usual range of 60min bars. / standard deviation of 60m range / and then
use statistics to anticipate the possible range of 60m bar. So when we find that current 60m bars are falling in lower part of that expected range, we know what to anticipate next..
Can we do like calculate avrage range of nifty daily bars on weekly basis and compare it with curent days range .... you mut have done some studies on this ..... in this way instead of rigidly following NR7 we can find out if current range is below some % of weekly average range then we switched to break out mode

.
Generally, NR7 break in the direction opposite to the last trend is great reversal catch.. but if the prev trend has strength then chances are that we will not see big opportunity.
(like it has happened in last 3 days when NR7 break got stopped out in both direction).

Have Seen after NR7 on Daily,,,, in 60 min chart some time it breaks out in direction of trend then imidiately after 1/2days we have trend rversal which if traded is also profitable ......... so planing to avoid trade if it comes after long trend and we break out same direction instad wait for reversal if happen in near future ........but how to know efcs of contraction by NR7 gone so no more trade and wait for nxt NR day

Another approach could be to build up the position gradually i.e. on day 1 after NR7 break, take first lot.. and on day 2 if trend continues (i.e. bar making new low) then add position below day1s low.
Thanks............

I would prefer to use judgement here, instead of following the rule to the dot.. Let me arrange the NR setups in the order of strength .. so higher the strength, better odds are in our favour.,
- NR4 / NR5, 6, 7 (higher the number, stronger the signal)
- 2 day NR4 or higher (indicates - contraction stretched for 2 days)
- NR4 or greater on weely chart ( adds to the strength of daily NR setup). Trick here is to know the typical range of a week and comparing that to what is the range developing now.
In my observation, you will have NRx days during a NR week.. (say Thursday is NR7 day and we get breakout on Friday).. and later we see break of weekly range on Monday.
Lot of subjectivity here.
As I use NR pattern more as setup to support my other trading decision, hence I can live with this subjectivity.
But it certainly helps me knowing when to be really aggressive in the market and when to be a bit cautious.
Thanks.......




Given my view above. Sunil has done some work on this, maybe he can comment more on 2 day - NR4.. My gut feel says that identifying 2 bar NR4 on 60m chart could be a good breakout signal for swing trades.
No no i was saying we get range of two days like High(D1 high,Day2High) similarly Low (D1low,D2Low) and calculate the range and see diferent NR pattern ......


Regards
Satya
 
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AW10

Well-Known Member
How do we trade this scenario: The day after NR7 is also a NR7 but make a low below first NR7's low?

Also I have seen that many times, after the NR7 day, the low next day goes below the NR7 day triggering a false sell, and then next day onwards the price starts shooting up!

Ex:
Day 0 : NR 7 setup detected
Day 1 : A low below day 0's low triggers SELL
Day 2: Price starts moving upwards violently!

Any guidelines on identifying a potentially false signal?
Bunny, We can never predict the direction of breakout. At times, breakout works and at other time, same setup fails. so rather then predicting and trying to be correct in our decision... we have to play the probability and adjust our trade management process.

In this post (post #18), I have mentioned about how to play the breakout.
http://www.traderji.com/technical-analysis/27956-scalping-strategies.html#post307876

This approach will be able to get you into the next reversal trade, after false breakout.

We can certainly monitor certain other factors to judge the strenght of breakout. (Though they are subjective but market is too complex to judge by set of rules always.. So I am happy with some amount
of subjectivity )
1) Price does not return to NR7 days range.. (depending on amount of penetration, we will be able to sense it.) You can watch for Pivot High/Low (PH / PL) level of NR7 day. If PHs are getting broken then the trade goes in
amber zone where we need to watch.
2) In perfect breakout, we should be able to see big range on next day.. which indicates expansion. If there is no expansion. then better watch out. Market is telling you something..so we better listen to it rather then closing our ears and eyes and predicting that we just caught the NR7 breakout and we can't go wrong.
3) Volume should support breakout.
4) The break should be able to break previous intraday PH/ PLs of NR7 day or the day before
5) Moving averages should start diverging and getting properly aligned to indicate the begining of next trend.
7) MACD / RSI / Stoch should start showing the clear picture.. (not sideway cris-cross pattern that confuses traders)

There may be more.. (but I think above 7 points are more then enough).
In my trading, I get into the breakout of NR7 range. and then add-on to the position as soon as confusion zone is crossed and we are about to enter the smooth sailing zone.
(it is like driving thru city traffic then to ring roads and then on to the highway..)

Happy Trading.
 

Aqua9

Well-Known Member
Hope you have noticed the development of second consecutive NR7 day today.
Pattern that is rarely visible.. 2day- NR7..

So get ready for breakout.. And best way to play this will be to go long with direction neutral strategy like
Buy - Straddle or Buy Strangle. July 4500-4600 strangle is available in 80 Rs or so and Aug 45-4600 strangle in 334 Rs.

Lets see what market is going to do in next few days..

Happy Trading.
Hi AW10

The last NR7 day was 21st July and post that 27th July today is NR7 day,
I have checked on this, and pls find below

Date Open High Low Close CLOSING DIFF NR 4? NR 7? IB ?
16-Jul 4223.50 4305.00 4205.50 4231.40 (2.10)
17-Jul 4231.45 4390.40 4230.15 4374.95 143.55
20-Jul 4377.90 4510.00 4377.00 4502.00 127.05
21-Jul 4501.50 4502.00 4436.60 4469.10 (32.90) Y Y Y
22-Jul 4469.30 4557.95 4380.45 4398.90 (70.20)
23-Jul 4409.70 4532.40 4405.95 4523.75 124.85 Y
24-Jul 4524.80 4578.75 4504.85 4568.55 44.80
27-Jul 4569.00 4593.00 4530.00 4572.00 3.45 Y Y
 

AW10

Well-Known Member
Hi AW10

The last NR7 day was 21st July and post that 27th July today is NR7 day,
I have checked on this, and pls find below

Date Open High Low Close CLOSING DIFF NR 4? NR 7? IB ?
16-Jul 4223.50 4305.00 4205.50 4231.40 (2.10)
17-Jul 4231.45 4390.40 4230.15 4374.95 143.55
20-Jul 4377.90 4510.00 4377.00 4502.00 127.05
21-Jul 4501.50 4502.00 4436.60 4469.10 (32.90) Y Y Y
22-Jul 4469.30 4557.95 4380.45 4398.90 (70.20)
23-Jul 4409.70 4532.40 4405.95 4523.75 124.85 Y
24-Jul 4524.80 4578.75 4504.85 4568.55 44.80
27-Jul 4569.00 4593.00 4530.00 4572.00 3.45 Y Y
Aqua, The high of 21st was 4524. giving us the range of 87points on that day. Friday's range was 73.9 (which triggered NR7) and today it is 63 (triggering another NR7 ).

For stats sake, Some of the narrowest days of recent past are

25/May = 65 points
27/March = 67 points
17/March = 61 points (but in march, index was at 2700 level so range as % of index value was higher then what we saw today).

Bottomline is we have seen the contraction.. Lets wait for the breakout.

Happy Trading.
 

AW10

Well-Known Member
All the best WOD / Ankit on your journey to 1st Billion.

In my observations, traders have not become billionaire trading their own account but only after they started managing others account (hedge fund industry is full of such success stories).
Let me know if you guys ever think on those line. Maybe, I can give my account (atleast part of it) to you guys to manage it and retire from trading.

Happy Trading.
 
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