Trading NR7 setup

[AW10]

Thanks Rohan for giving this shortlist of NR7 today. I was expecting no NR7 stock today on such a wide day.I am surprised that these 3 stocks are still holding on.

In my opinion, they should be watched closely, cause if mkt bounces, then they will show further strength.. or if mkt falls then they are last to fall and hence might fall hard and catchup with other stocks.

Happy Trading

 

[trader.trends]

AW10

From posts of others, I make out that it seems to work so well on stocks. When I looked at Nifty futures, I find very few nr7 days there in 2009. And the break of direction was never clear. Is there any reason why this does not work on NF or have I read the data incorrectly and wrong in my conclusion?

 

[rohangawale]

Thanks Rohan for giving this shortlist of NR7 today. I was expecting no NR7 stock today on such a wide day.I am surprised that these 3 stocks are still holding on.

In my opinion, they should be watched closely, cause if mkt bounces, then they will show further strength.. or if mkt falls then they are last to fall and hence might fall hard and catchup with other stocks.

Happy Trading

Sir,
What i have observed in nifty stocks that , there are some stks which doenst move with nifty, there are some stocks which do not follow NR7 breakout, so in any condition we get NR7 stocks,
only in exceptional condition where nifty moved by nearly 200-250pts ++/--, in that case only we dont get nr7 stks.
as im posting it from long time, there must be only 2-3 days where we didnt get any NR7 stks.

 

[ThE HaMmEr]

tata motors a excellent script fr NR7.....

 

[ThE HaMmEr]

wow....gail daily breakout failure....

will b trading both gail and tata m fr intraday...

thanks rohan..

 

[veluri1967]

Dear AW-10,

NR7/NR4/ID breakouts is a way to trade, undoubtedly.

While googling, I came across a strategy in which it is suggested that trade can be made against the breakouts with a success rate of 60%. Does it mean that breakouts are 60% times a failure. Also it is said that with a good money management techniques and risk reward ratio it is a regular money making setup.

My observation is that NR7/NR4/ID breakouts on intraday basis gives trouble.
For example :-

1.Price opens outside the range and continues in the same trend. In such cases we miss a golden opportunity.

2.Price opens above high and crawls down to within range and closes.

3.Price opens below low and crawls up to within range and closes.

4.Price opens within range within no time it takes away either low or high. We have no time to place orders and leaves us in desperation lossing a big win.

If you can suggest some possible ways to counter these problems, this setup will be more useful to traderji mates.

Your signature has made a sense to me with yesterday's loss. Keep enlightening us with your knowlege and experience.

 

[AW10]

AW10

From posts of others, I make out that it seems to work so well on stocks. When I looked at Nifty futures, I find very few nr7 days there in 2009. And the break of direction was never clear. Is there any reason why this does not work on NF or have I read the data incorrectly and wrong in my conclusion?

TT, others are posting the stocks where it breakout has worked on Intraday level. But checkout rohan's list that he updates as followup on yesterday's NR7 stocks. You would see that almost 30 to 40% NR7 stocks don't show real breakout but come back to the same range.

To address your observation on NIFTY level, I have to ask, if you are looking at the price range of next day i.e intraday or price expansion in next few days i.e. swing. I don't have numbers but in generally we had range expansion after NR7 days. I think, due to extended consolidation that we have been seeing in market, we have many occurance of NR7 followed by another NR days.

Plz share with me some data/analysis result if you have on this observation. Maybe I shd do some more data crunching on this.

Just my views on your question (not supported by any analysis)

Happy Trading

 

[rohangawale]

NR7 Stocks Triggered on 12th Jan:

[B]STOCK		HIGH		LOW[/B]
GAIL		433.8		426
GRASIM		2,832.75	2,771.00
TATA MOTORS	797		781.05

NR7 Stocks Close on 13th Jan:

		[B]12-Jan			13-Jan	
STOCK		HIGH	   LOW		Close	Trigger[/B]
GAIL		433.8	   426		425.5	Down Break
GRASIM		2,832.75   2,771.00		2831.55	No Breakout
TATA MOTORS	797	   781.05		784.95	No Breakout

 

[AW10]

While googling, I came across a strategy in which it is suggested that trade can be made against the breakouts with a success rate of 60%. Does it mean that breakouts are 60% times a failure. Also it is said that with a good money management techniques and risk reward ratio it is a regular money making setup.

You are right Veluri. Breakout Trades have low success rate. Hence many people find it difficult to trade. As human being, we are not wired to be wrong more times then be right. We want to be right more often. But in trading, rules are different. You can be profitable with Low win rate. The formula that we need in our favour is
(Win % * Average Win size) - (Loss % * Average loss size). As long as this equation is +ive, we are in the money.

NR7 setup is profitable because your initial risk is small compared to average win size that is presented to you. Crux is to keep average win Large i.e. ride the new trend and keep trailing.
That means, it comes down to your trade exit method to get the best from this setup.. You can fine tune your entry, to wait for low risk entry setup i.e. enter after retracement.

We can also improve the results by finding out real v/s false breakout.
Not sure if you have checked this post or not where I have give some rules to identify if breakout is successful or not.

http://www.traderji.com/advanced-trading-strategies/29825-trading-nr7-setup-45.html#post384035

Chk these rules on your breakout charts for successful breakout and failed breakout and get a feel of it. With practice, you eyes and brain will get tuned to see successful or failed breakouts. You can make this process mechanical by programming the rules or use your discretion.

My suggestion to reduce the falied trades, modify the entry little bit. Rather then jumping as soon as price crosses the NR, wait for retracement. And when u see that retracement has stopped and prices have started going in the direction of breakout, you take the entry. This will also give u chance to see other the strength/weakness in breakout so that u can avoid weaker trades.

Hope this gives u some food for thoughts to take next action. Let me think of writing something to share some ideas about how to trade this patten on intraday basis.
Meanwhile, do check another thread started by bandlab2 where he is trading the failed breakouts. As you have observed, failed breakout setup has higher win %, so why not identify the case when
breakout is failing and then take that trade. All trapped traders who jumped early in the breakout will run to cover and their stops and their stoploss will put money in your pocket.

Happy Trading

 

[rohangawale]

NR7 Stocks Triggered on 13th Jan:

[B]STOCK		HIGH		LOW
GAIL		427		421.1**[/B]
RANBAXY		517.50		507.60
TATA POWER	1498.8		1475.6

**= 2NR7