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Range Contraction (NR7,ID) |
sherbaaz
Yellow Belt
Joined: 27 May 2009
Posts: 543
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Post: #1  Posted: Fri Nov 05, 2010 1:19 am Post subject: Range Contraction (NR7,ID) |
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Hi All,
I will try to explain about the range contraction using NR7 and ID. I am using it for my intraday trading. This again is not the perfect thing its has it flaws and you cannot escape from loss. Loss is inevitable. My purpose is to minimize the number of times it hit me.
One can very well use it for swing trading as it gives nice breakout opportunities.
I have learnt the set up from Toby Carbel book "Day Trading with short term price patterns & opening range breakout" and some other material from various websites. Toby Carbel had basically used NR7+ID for day trading but if BO comes one can very well go for the swing trading. My focus here will be more on day trading and less on swing as I do not trade swing. But I request people to contribute whatever they want in regard to NR7.
As per Carbel, "the contraction/expansion principle is defined as the interchange within the market between the phases of motion and rest i.e. between congestion (contraction) and expansion (trending)".
NR7 IS DEFINED AS A DAILY RANGE THAT IS NARROWER THAN THE PREVIOUS 6 DAY'S DAILY RANGES,TODAY BEING THE 7TH DAY. Here range mean HIGH-LOW of the day.
Scrips goes through regular expansion and contraction. Expansion is followed by contraction and contraction is followed by expansion. If we know in advance the contraction then we have odds in our favor. Here NR7 comes into the picture as it tells us one day in advance in which stock range contraction has happened.
How to find NR7 day:
1) Take the high and low of last 10-15 days.
2) Calculate the daily range High-Low.
3) Compare the range of today (today being the 7th day) and last 6 days if today's range is smallest then TODAY IS NR7 DAY. You can expect a good expansion next day in such stock.
4) If on NR7 day there is an INSIDE DAY also then probability is high that a good expansion'll be there next trading day.
NR7 in itself is not a set up for a set up we need a definite entry price, SL and targets. What NR7 tells is that there will be high probability of expansion in NR7 stocks. But those who are trading swing can make it a set up OR once you are aware that NR7 day is there focus on those stocks for day trading and for swing also as per your respective trading system.
I request all to google it you will get loads of information and knowledgeable material and kindly share it so that all of us gets benefited.
I am attaching some 2-3 days charts which will show the NR7,NR7+ID and its impact on price action.
Kindly share your thoughts,questions and criticisms.
Regards,
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rvg
White Belt
Joined: 31 Oct 2006
Posts: 279
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| Post: #2 Posted: Fri Nov 05, 2010 10:35 am Post subject: Thanks |
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Sherbaaz.... Thanks for starting this topic and also starting the interest in a great trading setup...
If you don't mind.. I would like to post some scrips that are showing NR7+ID on regular basis on this thread so that all members can take advantage.
Happy Diwali and best wishes for the festive season
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sherbaaz
Yellow Belt
Joined: 27 May 2009
Posts: 543
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| Post: #3 Posted: Fri Nov 05, 2010 10:41 am Post subject: Re: Thanks |
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| rvgandhi wrote: | Sherbaaz.... Thanks for starting this topic and also starting the interest in a great trading setup...
If you don't mind.. I would like to post some scrips that are showing NR7+ID on regular basis on this thread so that all members can take advantage.
Happy Diwali and best wishes for the festive season |
RVG,
Sure you can post whatever you want to post. The purpose of this thread is to share and increase the knowledge base.
Regards,
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rvg
White Belt
Joined: 31 Oct 2006
Posts: 279
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| Post: #4 Posted: Fri Nov 05, 2010 11:46 am Post subject: NR7 stocks for 5th Nov |
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Have attached an xl sheet with stocks displaying NRx and ID.. pls go thru and take positions as per your trading strategy
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20101104.xls |
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maooliservice
White Belt
Joined: 04 Aug 2010
Posts: 93
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| Post: #5 Posted: Fri Nov 05, 2010 12:12 pm Post subject: |
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| Sharebaz thanks for giving this information.will you pls explain what is 'Insider Day'(ID) in detail
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sherbaaz
Yellow Belt
Joined: 27 May 2009
Posts: 543
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| Post: #6 Posted: Fri Nov 05, 2010 12:29 pm Post subject: |
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| maooliservice wrote: | | Sharebaz thanks for giving this information.will you pls explain what is 'Insider Day'(ID) in detail |
Hi Maooliservice,
Inside day is the day on which the last candle completely inside the previous candle i.e. from the high to low its inside the previous candle range for eg you can chk titan eod chart on which 3/11 candle was and INSIDE DAY as 3-11 candle is completely inside the previous day candle.
The imp of ID is with NR7 is that there strong contraction in range one due to nr7 and another due to ID and u expect a good move next day.
Hope the above will clear the doubts u have if not feel free to ask and discuss.
Regards,
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girishhu1
White Belt
Joined: 17 Aug 2009
Posts: 316
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| Post: #7 Posted: Fri Nov 05, 2010 12:32 pm Post subject: |
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sherbazji/gandhiji,
sirji,
aloktext also qualifies for inclusion in the list.
anyway, how to select a particular stock for trading on a particular day from such an exhausting list.
also gandhi sirji, are u using any software to get such a list?if you are doing it manually, hats off to you, sir.
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maooliservice
White Belt
Joined: 04 Aug 2010
Posts: 93
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| Post: #8 Posted: Fri Nov 05, 2010 12:48 pm Post subject: |
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| Sherbaaz thanks for ur prompt reply.Do u mean'Inside Day' is 'Harami'candle pattern.Is it important only if it happens on the 7th day or if it is anywere in last seven days.
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sherbaaz
Yellow Belt
Joined: 27 May 2009
Posts: 543
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| Post: #9 Posted: Fri Nov 05, 2010 2:24 pm Post subject: |
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| maooliservice wrote: | | Sherbaaz thanks for ur prompt reply.Do u mean'Inside Day' is 'Harami'candle pattern.Is it important only if it happens on the 7th day or if it is anywere in last seven days. |
ya its a harami candle pattern. in range contraction if it happens on nr7 day its is more potent. anywhere in last seven day would not serve the purpose. As such this candle patterns is not very strong on stand alone basis.
Regards,
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sumesh_sol
Brown Belt
Joined: 06 Jun 2010
Posts: 2344
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| Post: #10 Posted: Fri Nov 05, 2010 2:41 pm Post subject: Re: NR7 stocks for 5th Nov |
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| rvgandhi wrote: | | Have attached an xl sheet with stocks displaying NRx and ID.. pls go thru and take positions as per your trading strategy |
Thanks a lot rvg& Sherbaaz for guiding me to this thread... So at least this confirms that I have understood the setup correctly, as I also scanned for sail,ifci and anantraj .... 
I'm also surprised how u look for such a huge list of stocks for nr7 setup...
Though it is too early to say anything on this, I believe the smaller the 7th day range, the higher the chances of success... May be association of another indicator like RSI might just add to the strength of the setup..
One thing still keeps me bemused as to what is the significance of "7" days, why not 6 or for that matter 8 days....
Regards,
Sumesh
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SwingTrader
Site Admin
Joined: 11 Aug 2006
Posts: 2903
Location: Hyderabad, India
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| Post: #11 Posted: Fri Nov 05, 2010 6:13 pm Post subject: Re: NR7 stocks for 5th Nov |
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| sumesh_sol wrote: |
One thing still keeps me bemused as to what is the significance of "7" days, why not 6 or for that matter 8 days....
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Toby crabel had come to this conclusion after doing rigorous backtesting on various market instruments in US. NR7 worked for him in addition to NR4. Of course, after years now it could be different as the character of the markets have changed. Also, it could be completely different for the Indian markets. But one would know that if only if somebody does rigorous backtesting on that scale....
Until someone takes up that, NR7 it is for everybody!!! 
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Srikanth Kurdukar
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SyndicateTrader
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Joined: 31 Oct 2010
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girishhu1
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Joined: 17 Aug 2009
Posts: 316
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| Post: #13 Posted: Sun Nov 07, 2010 12:12 am Post subject: |
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sherbaz/rvg,
surprising. why my reply deleted? anything wrong written by me?or limited participation expected?
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sherbaaz
Yellow Belt
Joined: 27 May 2009
Posts: 543
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| Post: #14 Posted: Sun Nov 07, 2010 1:16 am Post subject: |
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| girishhu1 wrote: | sherbaz/rvg,
surprising. why my reply deleted? anything wrong written by me?or limited participation expected? |
Hi girishhu,
I beleive your reply is here(one i can see), if you have posted any new reply i think it has not posted correctly as nobody has deleted it.
Kindly repost yr reply.
Regards,
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rvg
White Belt
Joined: 31 Oct 2006
Posts: 279
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| Post: #15 Posted: Mon Nov 08, 2010 12:14 am Post subject: NR7 and ID for 20101108 |
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Cash Stocks showing NRx and ID.. Use your trading system to take trades
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20101108.xls |
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59 KB |
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1022 Time(s) |
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