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NR4 Trading Strategy (How To Trade The Narrow Range 4 Bar)

The NR4 bar forex trading strategy is a price action trading system that is based on today’s high to the low price range that must be narrower than the previous 3 days.

Before I get to the trading rules of the narrow range 4 bar trading system, here are some things that you need to know:

Timeframe to trade: daily preferred

Currency Pairs: Any

Forex Indicators: none required

How To Identify The NR4 Pattern
the narrow range 4 bar pattern is made up of four bars
the most recent bar/candlestick will have a range that is much smaller than the 3 previous bars.
a breakout happens when price closes above or below the high or low of the NR4 bar.
NR4 Selling Rules
The best sell setups locations I believe to go short are on using the NR4 bar trading systems are:

resistance levels where you see the price is showing weakness in momentum and then a narrow range 4 bar forms.
price breaks the support levels and goes down and then retraces back to the support level and shows weakness by forming the NR4 bar as shown on the sell setup chart below.
Ok, here are the short trading rules….

identify the narrow range 4 bar on your daily chart
place sell stop pending order 2 pips below the low of the NR4 bar
place your stop loss 2 pips above the high of the NR4 bar.
for take profit, aim for previous swing low price level or aim for a 1:3 risk: reward.

NR4 Trading Strategy (How To Trade The Narrow Range 4 Bar)-price action  trading strategy

NR4 Buying Rules
The best place to use the narrow range 4 bar for buying are:

support levels where price is showing downward weakness by forming the NR4 bar like shown on the chart below.
The buy setup for the narrow range 4 bar is the exact opposite of the sell setup you’ve read above:

identify the narrow range 4 bar on your daily chart
place a buy stop pending order 2 pips above the high of the NR4 bar
place your stop loss 2 pips below the low of the NR4 bar.
for take profit, aim for previous swing high price level or 1:3 risk: reward.

NR4 Trading Strategy (How To Trade The Narrow Range 4 Bar)-price action  trading strategy

Disadvantages of the NR4 Bar Forex Trading System
as with all forex trading strategies, every system has its weaknesses. There will be times when there will be false signals when you will see price active your pending order and you think a breakout has happened but then it reverses and will take out your stop loss. Such is the nature of the forex market and expect that to happen.
there are no clear and fast rules about how narrow the NR4 bar should be. It’s a visual thing…and this may sometimes cause a few issues for new traders and you can miss excellent trading setups that form.
Advantages of the NR4 Bar Forex Trading Strategy
a simple price action trading setup
it can be a set and forget kind of system
you only need a few minutes a day to check if the setup has formed or not a place your pending order and walk away.
this system has the potential to make you stop overtrading…less is more in trading, they say.
stop loss is tight and that increases your risk to reward greatly when the trade goes as planned.
trading on the daily chart means that profit potential of this system is not on 10 of pips but 100-300 or even more and that depends on how strong the market trend is as well as how strong you’re never is to let your profit run and not exit too early.

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09 Jan 2019 1:01 pm Posted by tamilforex

 
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