NR7 refers to Narrow Range 7 (in this case, 7 Day Period on the charts).
What is Range?
Range is the High (minus) Low of a candle.
The 7 Period refers to 7 candles on the Daily (One-Day period) Charts.
Narrow refers to a candle that has the narrowest range (High (minus) low is the lowest out of seven days).
The NR7 concept starts from the day on which the narrowest (out of 7 candles) occur.
In other words, the NR7 strategy starts from the day on which the shortest candle (including wicks) out of 7 is formed. That implies that the 6 candles prior to it must be taller than it.
You also can set up your own screener based on the formula on the page above.
Using the screener at EOD you will get a list of stocks that have formed the NR7 candle for that day.
What is the Concept behind NR7?
According to the NR7 concept, when the narrowest range (shortest candle) occurs, it is a sign that volatility has contracted and the stock is now ripe for a break out on either side (up or down).
Therefore, you need to mark the support and resistance of the NR7 Day and use it as a reference to engage in a trade.
Remember that the NR7 signal is valid for a short term. You can assume that the signal will last between 1 and 6 days. Higher, if you are lucky.
How To Trade the NR7 Signal
You will need:
1. Daily Charts in Stage 1 (to create support and resistance levels)
2. 15 Minute Charts subsequently.
3. A switch over to Daily Charts at EOD and then again a switch over to 15 Minute Charts during trading.
It’s 6.15 PM now on 30-10-18. Let’s check out what the NR7 screener has thrown at us EOD:
Let’s go with the first stock – Repco Home Finance.
As you can see, today’s candle has the narrowest range as compared to the the 6 before it.
Today was the NR7 day for Repco Home Finance.
So, here’s what you need to do next: Mark the high and the low of the day.
The high is the resistance – around 352 and the low is the support, about 341.
Right, the next step is to switch to 15 Minute candles:
Right, now you have the range for tomorrow (31-10-18).
Your job is now made easy – BUY if 15 minute candle decisively breaks 352 or SHORT if it convincingly pierces below 341.
Your stop losses are the Support & Resistance lines. If the trade works in your favor, trail the stop loss.
This way you can discover stocks every EOD, set up your trade every night, set alerts per stock and be ready for intra day trade in the morning.
The beauty of the NR7 trading strategy is that it is extremely easy and 70%-80% effective. Try it tomorrow – you have the screener and you know the method now.
What is the NR4 Trading Strategy?
It is similar to NR7 strategy except that you have to choose the NR4 Day instead of the NR7 Day and apply the same logic you read upstairs.
You can try it using the screener above. Instead of comparing the latest candle with the previous 6 candles, compare it with the previous 3. That’s it.
Go ahead and paper trade this tomorrow and tweet if it worked on any stock.