Trading NR7 setup

[rkkarnani]

AW10,
When i backtested NR7 strategy on some stks i was much more concerned for the result/breakout on the next day itself as im purely a intraday player and i dont keep any positions pending for next day.
But still if i had some time then i will try to backtest the same for 2NR7, 3NR7 & 4NR7 days and see the result.
One more logic behind not testing 2,3,4NR7 days is that, though if we get NR7, 2NR7 or 3NR7 days it reflects on our daily watch list and we are just concern abt the breakout on either side and trade it.
if on the 2nd day the stk turn to 2NR7 day, in that instance also we are not getting a valid breakout and we leave the stk on day 1.
automatically on 2nd day its coming in our watchlist and next day we are concern abt the breakout on either side to trade.

there are very few instances when we get 3NR7,4NR7 days. statistically will have to find out the % of days, and result on next day.

Lets c when its poss for me to do this additional homework

Rohan, There can be situations where we have 2,3,4 NR7 bars but each bar breaking either the High or low of the previous bar, but the Range remains lesser than the previous bar thus making it 2NR7 day, 3 NR7Day..... have a look at NF on 16th, 17th and 21st April 2008 (18th to 20th were holidays), all are nr7 days but each has higher low hand higher high!!!

 

[mohhnow]

Dec 2009
attached image of Nifty NR7 and WS7 days.
with regards
Moh

 

[mohhnow]

29-12-2009
30-12-2009
also NR7 days.

 

[rkkarnani]

29-12-2009
30-12-2009
also NR7 days.

In nIfty Spot
17th was also and Inside day (IDNR7)!

 

[AW10]

aw10 ji
The NR7 setup explanation has remained very good, under your explanation it has become well explained. It was working out as late as the jump of Nifty from 4940+ -> 5150 with a couple of NR7 days.

Sir, may I ask you to explain WS7, and the related strategies related to the NR7 concept also, and its implication on trend & trading ...

Thanks Moh, Wishing you also more successful 2010 year ahead.

WS stands for Wide Swing and hence WS7 is nothing but Widest Bar of last 7 bars including current bar. It is another setup Toby Crabel has discussed in his masterpiece book.

As NR is indication of current contraction leading to Expansion soon, WS has opposite meaning. It indicates that we are in expansion and the range contraction is just around the corner so take parital profit out (if u trade as per targets), or watch out and move yr stops tight etc. This also indicates that don't jump into the trade now but calm down and wait for better entry price.

60min Flow traders, as explained by Saint call it WRB (wide range bar) and have special rules to trade it.

WS bars/ WRBs are also indication of trend strength i.e. if you get few of them in sequence then there is strong trend building up, Right trading approach will be to wait for forthcoming consolidation and its breakout or retracement to ADD-In or Enter.

It needs different mental setup to handle them cause our basic instinct is to feel left-out of such a tempting and fast move and natural reaction is to jumpt in asap. Personally it was challange for me to overcome this instinct and show patience on appearnce of WS bars. Appropriate trading strategy will be to wait for retracement and enter at better price.

Hope this helps.
Happy Trading

 

[mohhnow]

friends,
I have compiled the aw10 NR7 setup pages into
word doc file. Total pages without picture 492 pages.
Can you advice me on:
How to incorporate pictures.
What would be the best way to format the tables for proper alignment of numbers.
[Regular manual formatting of 492 pages will be too tedious.]
How to upload for others usage, if they want it.

Thanks
with regards
Moh

 

[AW10]

Dec 2009
attached image of Nifty NR7 and WS7 days.
with regards
Moh

Thanks Moh for the chart. This thread lacks picture so it is always nice to see them.
Let me take it to explain about WS7.. Look at the 2 days of calm period (i.e. NR days) after 15-Dec WS7 bar. Similarly, we have calm 29-dec and 30-dec after the WS bar of 23rd. As a smart trader, this helps us in managing our expectations and adjusting the trading after WS days.

So when after NR7 day, we are ready to go aggressive and get best out of expansion,
we should reduce our risk per trade and have low expectations after a WS days. After WS day, it is time to protect the profit and limit losses, not a time to go aggressive.

Daytraders know it pretty well, that how difficult is it to handle narrow range days. Most of the time, our stops are taken out repeatedly on those NR days and we get depressed wondering why we made losses today when we were great trader yesterday on WS day.

As per Price action, even after these 2 NR7 days, the breakout created by WS bar is still safe. So uptrend is still intact. And observe the position of WS bar. It is just at 50 dma.
It shows that price below 50 dma is rejected by market with a bang and mkt bounced back with strength.

Classic example of price action and bar patterns in play.

Lets see if we get more bullish WS bars as follow-thru or red WS bar as reversal. Either way, we know that next WS is just around the corner after double NR7s. If not on 31st then by Monday or Tuesday we shd see WSx.

Happy Trading

 

[AW10]

Thanks a lot Moh for this compilation.

How to incorporate pictures.

to incorporate pictures, I think, u can right click of picture and copy it to clipboard and directly paste in word file.

What would be the best way to format the tables for proper alignment of numbers.
[Regular manual formatting of 492 pages will be too tedious.]

I think, some word macro user/VBA expert will be able to advise on it. For the time being, I can't think of anything else till I see the file. Not sure which are these tables, else I might have excel file for them.

Can anybody help, plz ?

How to upload for others usage, if they want it.

You can upload it on 4shared / rapidshare type of site and post the link here.
Once it is properly formatted, I will update one of the initial posts with the link.

Thanks a lot. again.

 

[mohhnow]

aw10 sir,
now that we are on 2 nr7 days, following the ws7 big bull bar, may be there is a possiblity to quick pull back to 50dma, sir ? before coming up.

And, so far 3 times below 50sma had been just like a spike dip and pull up...
------

also, I have the doc file as about 500pages.
with regards
Moh

 

[mohhnow]

aw10 sir,
can you try this link where i put the file
http://www.mediafire.com/file/rxjznjy4qvz/aw10 nr7setup traderji till 20091230 nopic.doc

with regards
Moh