Trading NR7 setup

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Suggested Trading System - DRAFT rules

I am providing the rule for the system here. It is for purpose of backtesting. Based on the result, we might have to modify them. The text between < > is for explanation.

Feel free raise your doubts, if any and I or others will try to clarify them. If there is any error / ambiguity then please highlight so that I can correct it (I am human being and do make errors regularly).

Assumptions -
1) After todays market close, we have the system in place to find out whether today was NR7 day or not (i.e. smallest range of last 7 trading days) You can use the excel sheet attached in post 2 of this thread.
2) We have the time to enter the orders during tomorrow market hours (not busy day at office etc)
3) It is SWING TRADING position i.e. we are looking to hold this position for more then 1 day. We will be using DAILY timeframe chart of NIFTY SPOT to take any trading decision.
4) We are going to use NIFTY FUTURES NEAR MONTH to trade. On last week of the month, we will start using NEXT Months NF Contract.
5) Do we want to use FILTER of few points above High/Low or not ?
6) Designing the strategy to go SHORT first. This is to maintain simplicity. The rules can be adjusted for LONG entry by applying the same logic with minor adjustments..

Underlying logic behind why this strategy should work -
Refer to post 1 of this thread..

<If you dont believe in this underlying logic then it doesnt make any sense for YOU to go ahead with strategy. Even if it is profitable, YOU will find it difficult to implement it because of many psychological challenges posed by your subconscious mind. So either get convinced by underlying logic by asking question, reading, research etc or move onto something else.>

Setup Rules
1) NR7 setup is triggered today.
2) Note the HIGH and LOW of today. (Calling Day0-H and Day0-L)
<these are basic condition that should be met. If they are not in place then skip any other action and do something else>

Entry Rules1) SELL below the Day0-L on next day i.e. Day1. (BUY above the Day0-H)
<These rules should be clear enough for even a 10yr old person with basic knowledge of chart construction, to understand else there is chance of improvement>

Exit - Stoploss
1) For Short trades, stoploss is at the Day0-H. (For long trades, stoploss is at the Day0-L).
<if using multiple contracts, then write in details how much of position will u liquidate and at what point>

Exit - Profit taking
1) No plan to place profit taking order for the time being. Trailing stoploss orders will be used to exit the position.
<you can define your rules for profit taking if you want. I generally touch this section after backtesting/some experience with the system>
<if using multiple contracts, then write in details how much of position will u liquidate and at what point>

Exit Trailing Stoploss
1) For Short trade, trail with the stop at HIGH of Previous 2 bars. (i.e. On Day1, stop = Day0-H/ Day2 , stop = Day0-H/ Day3, stop = Day1-H / Day4, stop = Day2-H and so on)
2) If market gaps from trailing stop order level /or for some reason the trailing stoploss order is not executed, then close the position immediately at whatever price is available.
3) Stoploss moves only in the direction of the trade. They are never moved against the direction of our position.
<if using multiple contracts, then adjust this section accordingly>

Following two sections needs to be customised for individuals account size and risk tolerance limit. But the example below will guide u in answering them.
I will certainly like to come back and update these sections as they are the foundation of trader's long term survival and the success.


Position size
<this deal with the question - how much quantity? Best practice is not to put more then 5% of your acct capital on one single trade.>
1) Trade size - 1 NIFTY contract
2) No add-on is considered at this stage. <else write down how will u add-on to the position>

Money Management
1) Initial risk of < 150 NIFTY points
2) Once in a trade, not to leave more then 200 points on the table.

<This might result in overriding your trailing stoploss section but it is important for you to be comfortable with your open profit and not fear about loosing the profit
Best practice - not to Risk (difference between entry point and stoploss) more then 2% of your acct capital on one single trade. If the risk in more then this then either skip the trade or accept the fact that you are taking higher risk and ready to face psychological roller-coaster ride when trade is open>

Following two section are not specific to this strategy but they are basic for successful trading

Mental /Psychological setup 1) Clarity in the underlying concept of this strategy. Know your strategy as much as possible.)
2) Not to confuse your mind with other exit rules.. that are not being backtested.
3) Focus on EXECUTING the trade RIGHT, not on result. YOU can only control your EXECUTION, it is upto market (which is beyond your control) to give u profit or loss.

When not to trade this strategy -
1) When u are not comfortable with the market conditions
<this section is one of the most important section for professional traders. They know the environment when this strategy will not work or produce poor result. You may not know at the beginning but as you backtest or start using this strategy, you will learn it gradually and can fill this section later.>

===================
Happy Trading.
sir pls clear my doubt
in first post as per table we calculate nr7 days simply by subtracting high minus low but here i n this post u suggest to subtract opening minus high and opnening minus low to arrive at nr7
gurpreet
 

AW10

Well-Known Member
I do agree with your view Satya. The market so far is showing the strength on down waves. Seems we have made right shoulder (will be confirmed by neckline break). We are seeing bearish abandon baby pattern on right shoulder. Downward sloping TL is intact.
MAs are sloping down and diverging..
So many factors are aligneing for downtrend. If we take simple AB=CD measurement then AB = 4700 to 4350 =350 pts. .so in CD wave we are easily targeting at 4600 - 350 = 4250 level. That is, only if we are seeing 3 wave down move (or ABC correction of elliot). But if it is 5 wave downtrend then we might go further down.

Thats is my current bias (but I am ready to accept the fact that mkt can prove me wrong once again) and I guess it will not change until bullish strength is coming back to mkt. Though on intermediate timeframe, i.e. weekly chart, we are still in bullish mode. Maybe in next 1 month or so, we might see the start of buildup towards Pre budget rally.

Happy Trading
 

Satyen

Well-Known Member
sir pls clear my doubt
in first post as per table we calculate nr7 days simply by subtracting high minus low but here i n this post u suggest to subtract opening minus high and opnening minus low to arrive at nr7
gurpreet
Hi days range always calculated by High-Low
 

AW10

Well-Known Member
Gurupreet,
If you are referring to this part of my post and bold text
Setup Rules
1) NR7 setup is triggered today.
2) Note the HIGH and LOW of today. (Calling Day0-H and Day0-L)
Then Day0-H is not Open - High.. but it is High of Day0. (day ZERO).
Day 0 is the day that gave NR7 signal., Day 1 is the day when you can enter the trade based on value from Day 0.

Range is always calculated as difference of High - Low.

hope this clarifies.

Happy Trading
 

AW10

Well-Known Member
Dear AW10 please check the attached Excel sheet where i have tried to find out 2 day NR7 day plz check roughly and say if its correct as i am going to find how to trade these days using 60 min pivot waiting your reply

http://www.4shared.com/file/125797047/a449a65e/To_See__NRs.html
Satya, I had a look at this sheet. What u are doing for 2 Bar NR7 pattern is correct.
Infact, Toby Crabel has also written about 2Bar NR day setup as well.
But instead of using last 7 days 2-day range, he has used last 20days of 2day range.
According to him - 2Bar NR indicates the end of consolidation / accumulation phase.
As Accumulation/consolidation comes to end, the range starts getting narrower cause smart money has completed there job and they are on the side line and waiting for Markup/ Markdown phase to start.

To track, smart money's footprint, 7 days is too narrow a period maybe thats whey he used 20 days lookback period.

I did simple counting of this in yr excel sheet and here is the statistics summary of their occurance

NR4 = 125 time out of 429 day
NR7 = 68 time out of 429 day
2bar NR7 = 71 time out of 429 day
2bar NR20 = 28 time out of 429 day

That means, 429 days (roughly 2 yrs), we get 28 2bar-NR20 i.e. approximately 1 per month. 2bar-NR7 comes more frequently approx 3 times a month.
Another observation that makes me think is that NR7 and 2 bar-NR7 are more or less same occurance.
There are 26 occurances when NR7 is flagged with 2bar-NR7.

That makes me think 1) are we better off using 2bar-NR7 2) NR7+2barNR7 days are stronger then simple NR7 days 3) Can we have further classification of NR7 days.

Enough topics for research sometime. Currently my diary is already full but certainly will would like to take up this task to satisfy that hunger exploring something new (atleast new for me).

Happy Trading.
 

Satyen

Well-Known Member
Satya, I had a look at this sheet. What u are doing for 2 Bar NR7 pattern is correct.
Infact, Toby Crabel has also written about 2Bar NR day setup as well.
But instead of using last 7 days 2-day range, he has used last 20days of 2day range.
According to him - 2Bar NR indicates the end of consolidation / accumulation phase.
As Accumulation/consolidation comes to end, the range starts getting narrower cause smart money has completed there job and they are on the side line and waiting for Markup/ Markdown phase to start.

To track, smart money's footprint, 7 days is too narrow a period maybe thats whey he used 20 days lookback period.

I did simple counting of this in yr excel sheet and here is the statistics summary of their occurance

NR4 = 125 time out of 429 day
NR7 = 68 time out of 429 day
2bar NR7 = 71 time out of 429 day
2bar NR20 = 28 time out of 429 day

That means, 429 days (roughly 2 yrs), we get 28 2bar-NR20 i.e. approximately 1 per month. 2bar-NR7 comes more frequently approx 3 times a month.
Another observation that makes me think is that NR7 and 2 bar-NR7 are more or less same occurance.
There are 26 occurances when NR7 is flagged with 2bar-NR7.

That makes me think 1) are we better off using 2bar-NR7 2) NR7+2barNR7 days are stronger then simple NR7 days 3) Can we have further classification of NR7 days.

Enough topics for research sometime. Currently my diary is already full but certainly will would like to take up this task to satisfy that hunger exploring something new (atleast new for me).

Happy Trading.
Thanks Dear AW10 .................
My Aim is not to trade a single trade .... what i was looking for is time when market goes into indecissive mode may be sideways like pattern in 60 minute time frame then wanted to check what happen after that ....saw after 2/3 trade it generaly hits a trend in 60 minute time frame even marked after NR7 days same thing happens if we trade for 3/4 trade sum is profitable so instead of taking NR20 as said by Toby carbel thought 2-Bar NR7 is good enough to track sideways movement in nifty

Yes this 2Bar-NR7 also contains NR7 days some time even some time after NR7 day it comes ..........

So i think as you Said NR7+2Bar NR7 are good enough to track indecissiveness /sideways or call it Accumulation, Distribution in market and we are ready with our 60 minute pivot to face the next trend and make most out of it will post a chart what i wanted to do with this pattern .............

Looks great to me till now lets see how it comes out
 

Satyen

Well-Known Member
The Whole IDea is to know when market will Move anydirection may be after starting 1/2 False move which is ok and loss can be neutralise after we get a trend ........... as i trade 60 minute so trying to find out in that time frame
 

rohangawale

Well-Known Member
NR7 stocks of nifty triggered on 18th aug are:

Code:
[B]STOCK		HIGH		LOW[/B]
AMBUJA CEMENT	101.4		98.6
HERO HONDA	1420.8		1366.1
RELIANCE IND	1956.2		1920.15
RPL		121.35		119
SUN PHARMACY	1196		1165
closing price of 19th:-
Code:
AMBUJA CEMENT  96.75
HERO HONDA      1359.20
RELIANCE IND     1885.85
RPL         117.05
SUN PHARMACY  1171.20
 

rohangawale

Well-Known Member
NR7 stocks of nifty triggered on 19th aug are:

Code:
STOCK		HIGH		LOW
DLF		384.5		368.05
ITC		225		218.05
 
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