Trading NR7 setup
- Thread starter AW10
- Start date
- Tags narrow range nr 7 nr4 option trade
- Status
WOD, In my viwe, you shdn't start with name of indicators in your mind and approach to design a system.
Your quesiton should - I want to trade trend (/breakout, /range / time of the day etc).. so which indicators can help me in that ?
Then you pull out the right indicators to help you. Each indicator has its own +ive points and own limitation. Hence it is important to understand that before using them.
There are few good threads that I have come across (one of that is suggested by scorpio)
1) Range market - Stochastics based trading - Pride's thread
2) Trading Reversal - Bollinger band based thread by columbus / Rajendrani's thread on trading patterns where he has mentioned about Gimmie bar.
3) Trading price action and market flow - 60m / or mini flow thread..
4) Breakout - use can use BB for this purpose as well.. (if you remember yesterday's commentary by Sunil where he mentioned that BBand should open the mouth now..etc..)
5) and many more options are here..
So it is your decision, dear. Make up your mind and lets discuss it more..
My approach to design a system is
a) first identify what u want to trade (eg somethign from the list above) [system theme]
b) Decide on how are u going to identify the right time for that situation [setup conditions]. That means , without these condition in place, we can't go to next steps.
Indicators /patterns etc can help u in identify the setup..
c) Precise Entry conoditons like buy above high of current bar + x point [Entry rules]. I prefer to use price action / PH-PL/ bar H-L etc for this. Because they are easy to see on chart
by all market participants and hence more significant then any indicator.
d) Precise Exit points like sell below low of current bar - x point [Exit rules]. You can further classify them in Stoploss exit / trailing exit / Target exit
At this stage, I will go down to backtesting it on old data and log atleast 30+ trades (I have already attached a sample backtesting sheet in this thread).
Look at the results in terms of what is average risk above rules have ? How much of average profit can I expect ? Does these rule really give me profit on long run ?
How many loosing trades can come in continuation etc etc..
e) Money Management and Position size - Depending on the analysis of backtest result.. now I am in better position to decide how much of my account should I risk here and
how many contracts I can buy. Bottomline is - I should remain in business so long term survival is the mantra of money mgmt.
WOD, Each time frame has its own profit potential /volatility / trade risk / #of generated trade/ stress level generated for trader etc
Hence , the answer should come from you. You are unique trader in this world. Your requirements - in terms of time that u can give to monitor charts / amount that u can risk on a trade / do u want
to book quick profit or have different mindset to handon to a trade and leave paper profit on the table../ how frequently u want to trade (5 trades a day or 1 trade in 5 days)
Answer of these factors will help deciding the timeframe selection.
Don't worry, I am not going to spoonfeed... but will prefer to guide you.. (As I attempted to do in this mail)
On top of all this - You are getting into trading business.. This is business of accepting mistakes and correcting them.. It is business where we have to jump in and make mistakes.
Thats what traders do.. They are not afraid of mistake.. So don't think that your decision has to be perfect . and u can't change it. Even if u picked up wrong indicator / wrong timeframe..
what the heck.. You can always correct it.. Let market prove that your decision was wrong..
Analysts have to be perfect in their recommendation.. a trader need not.. Trader need to take calculated risk and execute the trades..
Happy Trading
Your quesiton should - I want to trade trend (/breakout, /range / time of the day etc).. so which indicators can help me in that ?
Then you pull out the right indicators to help you. Each indicator has its own +ive points and own limitation. Hence it is important to understand that before using them.
There are few good threads that I have come across (one of that is suggested by scorpio)
1) Range market - Stochastics based trading - Pride's thread
2) Trading Reversal - Bollinger band based thread by columbus / Rajendrani's thread on trading patterns where he has mentioned about Gimmie bar.
3) Trading price action and market flow - 60m / or mini flow thread..
4) Breakout - use can use BB for this purpose as well.. (if you remember yesterday's commentary by Sunil where he mentioned that BBand should open the mouth now..etc..)
5) and many more options are here..
So it is your decision, dear. Make up your mind and lets discuss it more..
My approach to design a system is
a) first identify what u want to trade (eg somethign from the list above) [system theme]
b) Decide on how are u going to identify the right time for that situation [setup conditions]. That means , without these condition in place, we can't go to next steps.
Indicators /patterns etc can help u in identify the setup..
c) Precise Entry conoditons like buy above high of current bar + x point [Entry rules]. I prefer to use price action / PH-PL/ bar H-L etc for this. Because they are easy to see on chart
by all market participants and hence more significant then any indicator.
d) Precise Exit points like sell below low of current bar - x point [Exit rules]. You can further classify them in Stoploss exit / trailing exit / Target exit
At this stage, I will go down to backtesting it on old data and log atleast 30+ trades (I have already attached a sample backtesting sheet in this thread).
Look at the results in terms of what is average risk above rules have ? How much of average profit can I expect ? Does these rule really give me profit on long run ?
How many loosing trades can come in continuation etc etc..
e) Money Management and Position size - Depending on the analysis of backtest result.. now I am in better position to decide how much of my account should I risk here and
how many contracts I can buy. Bottomline is - I should remain in business so long term survival is the mantra of money mgmt.
WOD, Each time frame has its own profit potential /volatility / trade risk / #of generated trade/ stress level generated for trader etc
Hence , the answer should come from you. You are unique trader in this world. Your requirements - in terms of time that u can give to monitor charts / amount that u can risk on a trade / do u want
to book quick profit or have different mindset to handon to a trade and leave paper profit on the table../ how frequently u want to trade (5 trades a day or 1 trade in 5 days)
Answer of these factors will help deciding the timeframe selection.
Don't worry, I am not going to spoonfeed... but will prefer to guide you.. (As I attempted to do in this mail)
On top of all this - You are getting into trading business.. This is business of accepting mistakes and correcting them.. It is business where we have to jump in and make mistakes.
Thats what traders do.. They are not afraid of mistake.. So don't think that your decision has to be perfect . and u can't change it. Even if u picked up wrong indicator / wrong timeframe..
what the heck.. You can always correct it.. Let market prove that your decision was wrong..
Analysts have to be perfect in their recommendation.. a trader need not.. Trader need to take calculated risk and execute the trades..
Happy Trading
Hi Dear AW10 Very Nice Explanation ............ I Do trade 60 min flow and doing for quite some time its a profitable set-up for me and this has to be traded full derivative month ...
I am in process of finding time while market goes volatile and we trade for say 3/4 trade and sum shud be profitable and not wait for month end to calculate profit loss ..... infact trying to find out time when market gives trend moves ......before this NR concept was working on GAPs its also a nice concept after Gaps market never sits/goe into sideways so if we can interpret gap messege well then we can have nice profit
Now checking NR7 concept to this thought but find some times after a very good trend we have NR7 day and then it breaks out to the direction of trend ..... shuld we take these trade but if reversal comes after 1/2 days its also a good trade then shud we avoid the first trade and wait for imidiate reversal to happen if any ??
Need your views/suggestion how i can impliment this idea with NR7 days or shuld we look for NR4 week ( dont know how often it appears )
Again do we consider DOJI as a indecission days and go to smaler time framme to trade after dojis high/low broken etc ........
Read about 2 bar NR days even you said some where in this thread can u post any ideas on this also ............
Hope u dont mind writing all these things but i was thinking like this so posted to get some ideas from you
Thanks
I am in process of finding time while market goes volatile and we trade for say 3/4 trade and sum shud be profitable and not wait for month end to calculate profit loss ..... infact trying to find out time when market gives trend moves ......before this NR concept was working on GAPs its also a nice concept after Gaps market never sits/goe into sideways so if we can interpret gap messege well then we can have nice profit
Now checking NR7 concept to this thought but find some times after a very good trend we have NR7 day and then it breaks out to the direction of trend ..... shuld we take these trade but if reversal comes after 1/2 days its also a good trade then shud we avoid the first trade and wait for imidiate reversal to happen if any ??
Need your views/suggestion how i can impliment this idea with NR7 days or shuld we look for NR4 week ( dont know how often it appears )
Again do we consider DOJI as a indecission days and go to smaler time framme to trade after dojis high/low broken etc ........
Read about 2 bar NR days even you said some where in this thread can u post any ideas on this also ............
Hope u dont mind writing all these things but i was thinking like this so posted to get some ideas from you
Thanks
This is the most challenging part in trading which we have choosen.
when ever we think that our decidison is perfect , mkt shows that its wrong and its time to change, and as soon as u change ur decision again same things happens, its sort of loop where we are going behind mkt and never succeed to overcome it. when ever we think we are in sink of mkt, then again mkt is there to prove our decision wrong. it goes on and on and on and onnnnnnnnn.
what ever we do, end of day while trading it should be helpful to us while picking a trade and getting the trades on our favor, but when its not happening then it doesnt matter, which system ur using, which indicators ur applying on charts, which tf ur seeing, etc etc.
when ever we think that our decidison is perfect , mkt shows that its wrong and its time to change, and as soon as u change ur decision again same things happens, its sort of loop where we are going behind mkt and never succeed to overcome it. when ever we think we are in sink of mkt, then again mkt is there to prove our decision wrong. it goes on and on and on and onnnnnnnnn.
what ever we do, end of day while trading it should be helpful to us while picking a trade and getting the trades on our favor, but when its not happening then it doesnt matter, which system ur using, which indicators ur applying on charts, which tf ur seeing, etc etc.
again an nr44 day including todays day.
todas range of nifty spot is 74 pts.
prior to this the lowest range was on 25th may with 65 points.
so we can expect a very powerful move on monday where ever nifty gives breakout.
may be it will be the day i was waiting for and can see a good retracement after a long journey of nearly 600 pts on nifty.
anyways mkt has to tell us on which side we should trade.
but surely a lot will be known after mondays opening only.
todas range of nifty spot is 74 pts.
prior to this the lowest range was on 25th may with 65 points.
so we can expect a very powerful move on monday where ever nifty gives breakout.
may be it will be the day i was waiting for and can see a good retracement after a long journey of nearly 600 pts on nifty.
anyways mkt has to tell us on which side we should trade.
but surely a lot will be known after mondays opening only.
Satya, My views below
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.
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.
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..
We will never know what is going to come on the right side of the chart. That is the challange we all face. So we are just playing with the probability.
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).
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.
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.
Doji's do indicate indicision days. They can come with wide bar or narrow bar. As you mentioned, once we know that market is coming out from indecision range to clear decision, we can see the opportunity. All trend starts with lower timeframes.. So that gives edge to short time trader to jump in the trade earlier.
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.
Absolutely not Satya. This also gives me chance to use my thought process and learn from others like you. Keep posting your views.
Would love to know more from your findings /your views.
Happy Trading.
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.
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.
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..
We will never know what is going to come on the right side of the chart. That is the challange we all face. So we are just playing with the probability.
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).
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.
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.
Doji's do indicate indicision days. They can come with wide bar or narrow bar. As you mentioned, once we know that market is coming out from indecision range to clear decision, we can see the opportunity. All trend starts with lower timeframes.. So that gives edge to short time trader to jump in the trade earlier.
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.
Absolutely not Satya. This also gives me chance to use my thought process and learn from others like you. Keep posting your views.
Would love to know more from your findings /your views.
Happy Trading.
- Status
| Thread starter | Similar threads | Forum | Replies | Date |
|---|---|---|---|---|
| V | May 21th Gold Trading | Metals | 0 | |
| P | afl coding help required for nr7 trading | Algo & Automated Trading | 1 | |
|
Is anyone using NR7 for trading? | Technical Analysis | 28 | |
| B | NR7 Trading help | Advanced Trading Strategies | 6 | |
| J | Trading Straddles using NR7 setup | Options | 5 |