Trading NR7 setup

[vicky_ag]

AW10,

Does the last post mean, instead of getting caught in the whole joomla of exact NR7, we can start looking for something from NR4 to NR10 ? (I think anything less than NR4 would be useless).

 

[AW10]

Vicky,
The message that I wanted to pass from the last post was to be flexible in your approach when looking at this setup.
Due to the price action controlled by smart money, it is realistic that we will have the move of few extra points. In our regular trades, we use filter on x points to place the order
then why don't we use the same concept while analysing price action and trying to contraction zones.

As you rightly said, days with rating less then NR4 are too common and have no spciallity about them. (NR7 days comes approximately 15% of the time, and NR4 days are about 25%).
Bigger the number x in NRx, stronger the contraction. If we wait for NR8 / NR9 etc then we might not get enough signal.. but those days are most welcome cause they are giving us stronger signal.
At the same time, lower the number x in NRx, higher the chances of failed breakout. So it is trade-off.

Again, I use such subjectivity in my analysis hence wanted to pass that msg in my previous post.

Happy Trading

 

[lazytrader]

There is a way out of all the mess created by a single sided break and reverse on the next day of NR7.

That is:
If we look at the break of the day before NR7. What I mean is:

Day Number Range

1 130
2 145
3 125
4 160
5 110
6 100 -----> Consider the breakout of this day instead.
7 95 (NR7)

Also, a exit strategy is very necessary. As, we cant just sit back and enjoy the ride.

Tht is a good idea but i think AW has already mentioned somewhere that when you have a double NR day then take the widest of the days as breakout and SL. I think that strategy may work well. Specially today nifty moved up and made a new high on the spot then made a higher high than yesterday before breaking into a 150+ pt run on the other side.

At this point I would also like to mention that John Bollinger also said that when you have a tight range contraction the scrip would move to one side and touch the band and then breakout on the other. Dont why it happens but if it does happen it would be a vicious move because what it does is before a breakout it will move down and get the bulls on board then it breaks out and the bears get on it too, one side has to let go and in trying to cover/liquidate their positions add fuel to the fire.

 

[AW10]

At this point I would also like to mention that John Bollinger also said that when you have a tight range contraction the scrip would move to one side and touch the band and then breakout on the other. Dont why it happens but if it does happen it would be a vicious move because what it does is before a breakout it will move down and get the bulls on board then it breaks out and the bears get on it too, one side has to let go and in trying to cover/liquidate their positions add fuel to the fire.

This is how smart money can get the price that they want and execute their orders. Rule of the game of stock market.
Like today, the players took the mkt up (with price action that seems like more buying is coming in), got some more novice traders/ investor by from them at 4700 level so that they can sell their holding and book profit. As market reversed, more and more sell orders came in there were less buyer.

Typical market action around the tight trading range/contraction zone.

Thats is the reason why the success rate of breakout trades are poor.

Happy Trading

 

[Satyen]

Satya, This is where reality of market comes in place and we have to use our judgement. In above range sequence, 4th August is still NR6 day. If you use the judgement and try to look beyond exact range of 28th July, this gives a NR-10 signal. So without getting lost in the numbers x of NRx setup, I would still call it contraction day and get ready to face expansion. (if you noticed 26/July, 29th July range, it is almost double of previous NR7 day range. Too me, this stock/index looks real juicy fruit to day trade after NR7. It gives real nice move on next day)

If you look at average range of last 10 days then on 4th Aug, it was 105 points. So 80 points range of the day is almost75% of the average daily range. Which is good enough for classification as contraction range. I use the range of 80% of average as signal for contraction. That helps in smoothening the effect one-off data point. So if you are programming any indicator then instead of going by exact day range, I would suggest to take 10 days (or any other number) average range.. and If today’s range is <80% of this average range, then trigger the signal.

Hope this helps.

By the way, we had NR6 on Nifty yesterday, Prev day was NR5 and we have seen the nice range of 150+ points today..

Happy Trading

Thanks Dear AW10 no i dont want to program it but it will be nice if we can make a moving average of 10 days range and put it on the price it must be interesting to see and it can be done and logic is prety simple

Again is this also logical to see if we have range < 3% of previous close we call it contraction day i think you mentioned it some where in this thread ...........?

Yes after NR7 / Range contraction break out day is sweet to trade on intraday but i am looking out how i can trade 60 min pivots and take postions overnight using this contraction/expansion concept have seen/visual testing taking only NR7 days from Sunils Data that after NR7 Day if we trade 3/4 trade almost all NR7 give profit (Sum of all 3/4 trade )

Requesting you to give some ideas how i can impliment this 60 minute pivot concept with this range contraction theory

Waiting your reply

 

[AW10]

Again is this also logical to see if we have range < 3% of previous close we call it contraction day i think you mentioned it some where in this thread ...........?

Satya, by above statement, I made was to convert the range number as % of current mkt price of NIFTY. Hence current range of 100/110 pts on 4500 level of nifty comes to roughly 3%. When we are looking at range data then range in absolute number gives wrong picture..
100 points range when nifty was 2500 is wide range.. compared to 100pts when nifty is at 4500..
hence I changed the daily range in % by dividing it by CMP of nifty.

Happy Trading.

 

[Satyen]

Thanks Dear AW10 .......... will check ranges less than 3 % and less than 80 % of Average of 10 day if i can get a set up to trade

Need Some sugestion how to trade 60 minute time frame using this contraction/expansion theory

Waiting your reply

 

[rohangawale]

Nr7 stocks of nifty triggered on 6th aug are:

STOCK		        HIGH		LOW
BHARTI AIRTEL		401		394
NATIONAL ALUMINI	334		316
TATA POWER		1309		1280

 

[rohangawale]

NR7 stocks of nifty triggered on 7th aug are:

STOCK		       HIGH		LOW
HDFC LTD		2444		2370
HINDALCO		103		99
INFOSYS TECH		2058		2025
L&T		        1488		1460
NATIONAL ALUMINI	319		308.5
TATA COMM		494		482

 

[rohangawale]

NR7 stocks of nifty triggered on 7th aug are:

STOCK		       HIGH		LOW
HDFC LTD		2444		2370
HINDALCO		103		99
INFOSYS TECH		2058		2025
L&T		        1488		1460
NATIONAL ALUMINI	319		308.5
TATA COMM		494		482

at 10.40 the prices of triggered stks are:
HDFC=2324
HINDALCO=102.7
INFOSYS TECH=2079
L&T=1456
NATIONAL ALUMINI=318.7
TATA COMM=487