Last Updated on 17 February, 2026 by Abrahamtolle
The NR7 Trading Strategy, also known as the Narrow Range 7 is developed by Toby Crabel. This strategy is based on the idea that a narrow range of price movement in the previous seven days can signal a potential price breakout in the coming days. In this article, we will discuss the NR7 Trading Strategy in detail, including its concept, benefits, and implementation.
What is the NR7 Trading Strategy?
The NR7 Trading Strategy is a popular technical analysis approach that helps traders to identify potential price breakouts in the stock market. The strategy is based on a simple principle – that a narrow range of price movement in the previous seven days can indicate a potential price breakout in the coming days. The “NR7” stands for “Narrow Range 7,” which means that the current day’s price range should be the narrowest of the previous seven days.
The NR7 Trading Strategy is not limited to any specific market or asset class, and it can be used for stocks, futures, forex, and other financial instruments.
VIDEO about the NR7 and the Narrow Range 7
Benefits of the NR7 Trading Strategy
- Helps in identifying potential price breakouts: The NR7 Trading Strategy is a valuable tool for identifying potential price breakouts. By focusing on the narrow range of price movement, traders can anticipate a potential price breakout, which can help them make profitable trades.
- Simple to understand and implement: The NR7 Trading Strategy is relatively easy to understand and implement. Traders can use this strategy with other technical indicators or alone, depending on their preference.
- Risk management: The strategy includes setting stop-loss orders to manage risk. Traders can set a stop-loss order below the low of the narrow range day to minimize losses if the price moves against their expectations.
Implementation of the NR7 Trading Strategy
To implement the NR7 Trading Strategy, traders need to follow these steps:
- Step 1: Look for a narrow range day – Identify the narrowest range day of the previous seven days.
- Step 2: Wait for a breakout – Wait for the price to break out of the narrow range. A breakout can be a move above or below the narrow range day’s high or low.
- Step 3: Set entry and stop-loss orders – Once a breakout occurs, set an entry order to buy or sell. Additionally, set a stop-loss order below the low of the narrow range day to manage risk.
- Step 4: Take profits – Traders can take profits by setting a target price or using other technical indicators to identify exit signals.
Related reading: NR7 Trading strategies and Random Walk Theory
Key Indicators to Pair with NR7
While the NR7 strategy is powerful on its own, its accuracy improves significantly when combined with other technical tools. Since the NR7 identifies volatility contraction, traders often look for indicators that confirm the direction of the subsequent volatility expansion.
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Volume: A true NR7 breakout should ideally be accompanied by a spike in volume, suggesting that institutional players are entering the move.
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Moving Averages: Traders often use the 20-day or 50-day Simple Moving Average (SMA) to determine the overall trend. If an NR7 pattern appears above a rising SMA, a bullish breakout has a higher probability of success.
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RSI (Relative Strength Index): Using the RSI can help identify if the market is overbought or oversold before the breakout occurs, providing a heads-up on potential exhaustion.
NR7 vs. NR4: Which One Should You Use?
Toby Crabel also popularized the NR4 (Narrow Range 4) strategy. While both are based on the principle of range contraction leading to expansion, they offer different frequencies and “strengths” of signals.
| Feature | NR4 (Narrow Range 4) | NR7 (Narrow Range 7) |
| Definition | Smallest range of the last 4 days. | Smallest range of the last 7 days. |
| Frequency | Occurs more frequently. | Occurs less frequently. |
| Signal Strength | Moderate; indicates short-term coiling. | Stronger; indicates more significant “squeezing.” |
| Best For | Active day traders and scalpers. | Swing traders looking for major shifts. |
| Volatility | Signals a quick, immediate move. | Signals a potentially larger trend change. |
Common Mistakes to Avoid
Even though the NR7 is a mathematically sound pattern, market “noise” can lead to false signals. To protect your capital, keep an eye out for these common pitfalls:
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Ignoring the Broader Trend: Trading an NR7 breakout against a strong primary trend is risky. The best setups usually align with the direction of the higher timeframe trend.
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Chasing the Breakout: If the price gaps significantly past your entry point, the risk-to-reward ratio often becomes unfavorable. It is sometimes better to wait for a retracement or the next setup.
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Strictly Static Targets: While having a target is great, markets are dynamic. If the price moves 2-3 times your initial risk (R), consider trailing your stop-loss to the “break-even” point to lock in a “risk-free” trade.
NR7 on YOUTUBE
You can find this info about the NR7 on YouTube.
FAQs:
Q. Can the NR7 Trading Strategy be used in different markets? Yes, the NR7 Trading Strategy is not limited to any specific market or asset class, and it can be used for stocks, futures, forex, and other financial instruments.
Q. Is the NR7 Trading Strategy suitable for all traders? The NR7 Trading Strategy can be used by traders of all levels, but it is advisable to practice with a demo account before using it with real money.
Q. How can traders identify the narrow range day? Traders can use various tools such as candlestick charts, bar charts, and line charts to identify the narrow range day.
Q. What is the NR7UD? The NR7ID is a rare “double-compression” setup where a day’s trading range is both the narrowest of the last seven days and an inside day, signaling an extreme volatility squeeze that often precedes an explosive price breakout.
Conclusion:
The NR7 Trading Strategy is a popular technical analysis approach that helps traders to identify potential price breakouts in the stock market. The strategy is based on the idea that a narrow range of price movement in the previous seven days can signal a potential price breakout in the coming days. By identifying the narrowest range day and waiting for a breakout, traders can set entry and stop-loss orders to manage risk and take profits.
The NR7 Trading Strategy is a simple and effective tool for traders who want to make informed decisions in the stock market. By understanding and implementing this strategy, traders can improve their chances of success and minimize their risk.
In conclusion, the NR7 Trading Strategy, also known as the Narrow Range 7 by Tobu Crabel, is a valuable tool for traders who want to identify potential price breakouts in the stock market. This strategy is simple to understand and implement, making it suitable for traders of all levels. By following the steps outlined in this article, traders can use the NR7 Trading Strategy to improve their trading performance and achieve their financial goals.