Trading NR7 setup

[AW10]

WOD ,

IMO, putting stoploss on option is tricky. I use 2 approach for this.

One is money mgmt based, ie. based on amt that is paid, if some % of that amt is lost then get out. or if some % of that money is achieved then make postion to breakeven. Generally I enter with more then 1 contract, and sell them in steps to bring position to breakeven or to book partial profit.

SEcond is based on trend and chart levels. If trend changes, then irrespective of premium value, just take the action.

my views for sure...

I agree with the two approaches that Vineet mentioned.

I can add following 2 to it.
1) for long option positions, implement time based stop..i.e. if your position is sensitive to time decay then get out of them when time decay really starts hurting a lot
2) if you want to have swing position using naked long call option, then near the end of the day, covert it to Spread by selling another position.. That way, u are safe gaurded against the time decay and also against the opening gap. With spread, you can basically create at market neutral position to protect yourself.
Next day, when market comes to senses after opening hr trading is over, then u can take appropriate decision and close on leg of the position. (you might end up paying extra brokerage and minor loss but thats is the price of your sound sleep in the night and one extra drink in the pub).

Happy Trading

 

[AW10]

True -- maybe my drafting of the message was a bit off -- what I actually meant was sometime we feel we are better off w/o it.

And yes, the re-entry --- that part needs to be thought about and slowly implemented in the psych ....

e.g. Shorted 4 lots NF at 4120 with S/L at 4125, hit and then ... whoosh .... (a friend)
Yes the SL was very small BUT who had thought that mkts would just go dooowwwnn... and it was 4 lots therefore did not want to lose much too
This was the second instance, 1st was at 4150, 1lot - NF hit SL at 4175 went to 4180 and then came down like WoW the next day .......

Murtaza Bhai jan, pata nahi kee appke stop exactly xx75/ xx50/xx25 type ke level par rahte hai yaa thode aage pichhe..
These round numbers are easy target of smart people who are interested in eating such stoploss orders. Try to hide them under other numbers like xx73.6 / xx52.3 etc.

another approach might be to add some filter to such pivot levels.

That's what I generally use. As a smart trader, we need to learn where to hide our orders and where to expose them.

Happy Trading

 

[lazytrader]

Murtaza Bhai jan, pata nahi kee appke stop exactly xx75/ xx50/xx25 type ke level par rahte hai yaa thode aage pichhe..
These round numbers are easy target of smart people who are interested in eating such stoploss orders. Try to hide them under other numbers like xx73.6 / xx52.3 etc.

another approach might be to add some filter to such pivot levels.

That's what I generally use. As a smart trader, we need to learn where to hide our orders and where to expose them.

Happy Trading

My method is to use the prem/discount to set sl. What I do is when my stop is 4000 on the spot and NF is trading at 8.65 pts disc lets say I am willing to risk 25pts then stop becomes 16.35pts away (because of discount) so it becomes 4016.35. I sometimes add 1-2pts to set it a little higher at 4017.35. I find it better to set it this way because it is not some arbitrary number but based on a well defined level and calculated to make sure that the SL is not hit by stop flushing spikes and it also works better in terms of SAR since I get in at a good RR point.

 

[Satyen]

Hi all,

First of all i would like to thank the senior members and AW10 for this wonderful system. which is very easy to understand for all.

I have seen there is lot of confusion in the selection of data... Spot or Futures... IMO i would prefer to keep spot coz it is easily available to all. Most important thing is i have backtested this system from 1996.. (spot)... it has given very great result... in which these slippage of 10 to 15 points (future points) can be easily taken care...

These are my opinons... if iam wrong.. wish to seek appoligies

thanking you all

happy trading
chandra mohan

Hi Chandra Mohan Can You please post the backtest Result ........ and Can ou please upload Spot data some where which will be great help

 

[Satyen]

Naresh, 3 or 4 points here are there are ok. Personally (and practically) , I would call it NR7 week and will be ready to take swing trade based on daily Timeframe on the break of it. In essence, it still means a week of narrow range (contraction) price movement which is good enough signal for swing trade on daily TF.

Day trade - look for NR7 on daily chart and trade intraday to benefit from expansion
Swing trade - look for NR7 on weekly chart and trade on daily timeframe for expansion.

Happy Trading.

Dear Aw10 If i want to trade on 60 min time frame then is i ok to look out NR7 on Dail Chart ??

 

[Satyen]

Just to clarify the difference between , Daily Range and aTR (Average True Range)

Daily range just looks at difference of Day's high and low.

ATR is derived from the True Range which is the greatest of the following three values:
1) difference between the Today's high and low (i.e. daily range)
2) difference between the Previous Close and Today's High
3) difference between the Previous Close and Today's Low.

That means, ATR does take into consideration the opening gap.
So when we a day with wide gap but then for the whole day the action was in narrow range, we might get a NR signal.. but on ATR front it might still show as high ATR day.

With this background, I would not use ATR to identify NR days.

Happy Trading.

Thank You ................

 

[AW10]

Dear Aw10 If i want to trade on 60 min time frame then is i ok to look out NR7 on Dail Chart ??

Satya, I have not traded/tested it on 60min chart but that timeframe has quite well defined and smooth charts then 5min charts.
You can define a bit flexible rules and develop a tradable system around that..
If nothing, then atleast use it capture bigger picture.. and trade accordingly. eg - Weekly has contracted, daily has contracted, and hourly chart too.
So any breakout will be first visible on Hourly chart leading to daily chart breakout and then too daily chart.

I am sure, u can apply multiple timeframe trading concept here and benefit from it.

I think, Sunil has done some analysis on using NR7 on 60m chart.
Sunil - Can you plz share your views/experience on this, please.

Happy Trading.

 

[Satyen]

Satya, I have not traded/tested it on 60min chart but that timeframe has quite well defined and smooth charts then 5min charts.
You can define a bit flexible rules and develop a tradable system around that..
If nothing, then atleast use it capture bigger picture.. and trade accordingly. eg - Weekly has contracted, daily has contracted, and hourly chart too.
So any breakout will be first visible on Hourly chart leading to daily chart breakout and then too daily chart.
I am sure, u can apply multiple timeframe trading concept here and benefit from it.

I think, Sunil has done some analysis on using NR7 on 60m chart.
Sunil - Can you plz share your views/experience on this, please.

Happy Trading.

Thanks a lot .... no I dont want to find NR7 on 60 min chart .... as you Said i wanted to find NR7 on Daily chart and then will go back to 60 min chart to find out trade .....

 

[lazytrader]

I didn't quite get what your would be looking for on a hourly chart. Can you please explain your strategy?

If you want to play options they you can use the same strategy AW10 has mentioned in post#3. For which you lookout for a narrow range on daily which can be done in excel as well. If you are going to look for breakout bar (WRB) on a 60min chart then you can look for it in any case whether you have a nr day previously or not. Simply take the trade in the direction on the breakout bar.

 

[Satyen]

I didn't quite get what your would be looking for on a hourly chart. Can you please explain your strategy?

If you want to play options they you can use the same strategy AW10 has mentioned in post#3. For which you lookout for a narrow range on daily which can be done in excel as well. If you are going to look for breakout bar (WRB) on a 60min chart then you can look for it in any case whether you have a nr day previously or not. Simply take the trade in the direction on the breakout bar.

Hi LT .. What i try to do is "when to trade " ...Once we have a NR day /week then its obvious that market will go into volatile mood and we will have swings in any direction and most important is we will not have sidways movement soon as we recently broken out from congstion ..... then we can use 60 min chart to trade .... for example before budget it was NR7 days and a NR4 Week also ( As Said by AW10 ) then if one is trading 60 min chart then he must have traded that triangle break out which becomes false one and market moved other direction rapidly so instead of worrying about stop hit we should try to trade the break out fail one as we know market will move for some time .... so here we will try to trade say 2/3 trade and which will be profitable in my view ..........

in fact trying to find out how 60 min flow trade beahves after a NR day /week hope to get some input from you ..........