INSIDE DAY NR4 (ID/NR4) TRADE SETUP
Toby Crabel did some serious
work on volatility patterns in price movement. The Inside Day/NR4 (ID/NR4) is
one of the patterns he wrote in “Day Trading with Short Term Price Patterns and Opening Range Breakout“.
An inside day is one with a
lower high and higher low than the previous bar. NR4 is a bar with the
narrowest range among the last 4 bars.
Hence, ID/NR4 is an objective
criterion for identifying days of decreased range and volatility.
Once an ID/NR4 is found, we
trade the breakout as volatility resumes.
TRADING RULES FOR ID/NR4
RULES FOR LONG
1. An inside bar
with the smallest range among the last 4 bars.
2. Place buy stop
order above the high of the bar.
3. Wait for break-out
to trigger order.
RULES FOR SHORT
1. An inside bar
with the smallest range among the last 4 bars.
2. Place sell stop
order below the low of the bar.
3. Wait for break-out
to trigger order.
