Intraday Strategy with Narrow Range Theory (NR7) (2024)

FAQs

Does NR7 strategy work? ›

Research shows that implementing an NR7 strategy can lead to profitable trades in various markets such as stocks, forex, and commodities. By identifying these patterns early on, traders can enter positions with lower risk and higher reward potential.

The NR7 strategy focuses on identifying the narrowest trading range over a seven-day period. This strategy considers the absolute day's range – the difference between the high and the low of a trading day – rather than the percentage range.

One should buy only when the previous candle is an NR7 candle, and the current candle has a Gap-Up opening. One should sell only when the previous candle is an NR7 candle, and the current candle has a Gap-Down opening. You can learn more about the concepts through our share trading courses online.

NR7 is the day when the price range was the narrowest in the last seven days. Similarly, NR4 is the day when the price range was the narrowest in the last four days. The range is the price difference between that day's High and Low. A bullish setup occurs when the breakout is from the top of the NR7/NR4 candle.

The NR7 fulfills the measure rule only 43% of the time (bull market, up breakout). That is, measure the height of pattern and add it to the highest price in the pattern to get an upward target or subtract it from the lowest low in the pattern to get a downward price target.

Indicator-Based Directional Trading

This strategy uses an indicator to determine the direction of the trade. The indicator provides a clear signal when it's time to enter or exit a trade, making it easy to work with. Traders who use this strategy can expect to see consistent results and high success rates.

For an aggressive trade, place a stop at the swing low on the five-minute chart. For a conservative trade, place a stop 20 pips below the 20-period EMA. Sell half of the position at entry plus the amount risked; move the stop on the second half to breakeven.

Keep the Bigger Picture in Mind

For instance, in addition to utilising the best time frame for intraday trading, another strategy is to keep the day of the week in mind. Monday afternoon is often a desirable time to make purchases on the market as it has historically tended to drop at the start of the trading week.

NR7 (Narrow Range) means when a stock price has made the smallest range (High-Low) in the last 7 days. NR4 (Narrow Range) means when a stock price has made the smallest range (High-Low) in the last 4 days. It is the candle formed completely inside the shadow of previous candles high and low.

Bollinger Bands: Bollinger bands are an indicator of volatility that can confirm breakouts. By putting Bollinger bands on a chart, traders can see how volatile the trend is and know that a breakout has happened when the price breaks above or below the Bollinger bands.

Which indicator is best for breakout trading? ›

Indicators such as Moving Averages, RSI and MACD can be used to measure the strength of the breakout. Volume: An important factor to identify a breakout is the trading volumes of the stock. It is essential that the volumes traded should be high on the day of the breakout.

Narrow Range (NR) trading strategy is a breakout-based method that assumes that the price of security trends up or down after a brief consolidation in a narrow range. This indicator can plot: 1. Narrow Range (NR) 4, 7, and 21 2.

Different candlestick patterns convey various sentiments, such as bullish, bearish, or indecision. Chart patterns are used to identify broader market trends, such as trend reversals or continuations. They provide insights into the overall supply and demand dynamics in the market.

Chart patterns work by representing the market's supply and demand. This causes the trend to move in a certain way on a trading chart, forming a pattern. However, chart pattern movements are not guaranteed, and should be used alongside other methods of market analysis.

Trend trading strategy. This strategy describes when a trader uses technical analysis to define a trend, and only enters trades in the direction of the pre-determined trend. The above is a famous trading motto and one of the most accurate in the markets.

Divergence is one of the strongest reversal signals you can get. But do keep in mind, this is a reversal trading strategy whereby you are fading the current trend. Below is an example of bearish divergence on the EUR/USD currency pair. You will notice the price made a higher high, but the indicator made a lower high.

In the case of the ORB trading strategy, historical data and analysis indicate that it is profitable. At least, according to people who used it. ORB enthusiasts often report winning rates ranging from 42% to 65% and sometimes even higher.