I am posting here a simple trend chaging NR7i system. I am doing this in intraday 15 min chart. Didn't try with EOD charts
Whats NR7i
Pl see AW10 thread on NR7. NR stands for Narrow Range. NR7 means the current bar is narrowest in last 7 bars. Narrowest means the range (high-low) is the lowest. 'i' stands for inside bar. Inside bar has low, high within previous bar. low should be higher than previous low and high is lower than previous high. NR7i is the bar that is NR7 AND inside bar. NR7 by definition is showing contraction and inside bar strengthens this. so combination of these 2 is deadly. Break out of this range could be in either direction.
Entry
We need a NR7i bar. then next bar (or bars) should break high or low and fail to go ahead in same direction and revereses. thats when we enter. lets see an example.
11:15 bar is NR7i bar. high of thus bar is 1750, low is 1745. so range is 5. lets say next bar starts going up and takes out 1750 and goes up some more, but not more than 1760 (this is derived as 2 times the range plus buy price). now it starts going down, takes out low of NR7i which is 1745. now we enter SHORT at 1745 with target 1730 (3 times the range) and stoploss 1752.5 (hi +50%range). this could happen in 11:30 bar or 11:45 or 12:00, 12:15. we wait for maximum 4 bars for the entry. If the price takes out high and goes above 1760, then there is NO trade. we wait for next trend changing NR7i
Same thing for LONG trades
Here we consider yesterdays bars also for today until we have 7 bars today. But we dont consider 09:55-10:00 data. first bar is 10:00-10:15
Take Profit
As explained above, its 3 times the NR7i range. why 3 times ? you can keep 2 if you want. 3 is what i got during my tests
Stop Loss
1.5 times range. this would give RRR 1:2 which is good
What to trade ?
I tried nifty futures, and high liquid stocks like sbi, axis, ril, icici, dlf, tata steel, tata moto, hdfc, hdil etc
Caution
Strict hard stoploss is mandatory. dont even think twice. place SL order immediately after entry. lot of times the price moves violently around this area. so place your SL, TP orders immediately and cancel one when other is filled
also place your entry order as soon as NR7i hi/lo is broken. If NR7i hi is taken out, then place your SHORT order at low of NR7i bar in anticipation
I strongly recommend this using some software like ami, meta etc. because doing calculations manually is time taking and you will miss trades
Please paper trade few days to understand the system
Why the system would work
NR7i break out would take the price significantly higher/lower. but we dont know the direction. sometimes it gives false signal and when this happens the reversal would be swift and violent and in fact takes out our target in same bar !!! Since we have RRR 1:2, then even if 50% trades are successful we would be in profits. Out of a basket of 25 stocks, we may get 3-5 trades in a day. when market is range bound, we get more such trades !!!
