VWAP TRADING Strategy With NARROW RANGE Candlesticks πŸ”₯πŸ”₯


– [Instructor]
Welcome to the video on intraday trading with
narrow range candlesticks. In this series, we
will be learning about intraday
trading strategies and short-term
trading in detail. In this part, I will be
showing you how you can use narrow Range Candles
in day trading and then combine this
with VWAP indicator. Again, what I will explain
here is extremely simple and this is something
you can learn today and start practicing
it from Monday. So, let’s get started. So let us first understand
narrow range candlesticks and then we will discuss
how to combine this with VWAP indicator. In this section, I will take up narrow range four,
that is NR4 candles, and in the next section I will take up narrow
range seven candles. Now range in a candle means the distance between
high and low, and in order to mark
out NR4 and NR7 Candles, we need to compare range of four and seven
candles respectively. In this chart I have
marked out all NR4 candles with these black circles
that I’ve marked here. If you look at each
candle that is marked, its range is the smallest
among the last four candles. Take for instance this candle,
now range of this candle is the smallest among these
four candles that you see. Therefore, this current range
candle is categorized as narrow range four candle. Now, I have done the markings
here with a simple script that I’ve used on
TradingView.com. Link to the same is given in
the comment section below. Let us now look into
narrow range seven candles, also known as NR7. Like NR4, NR7 candlew
have the range smallest among the last
seven candles on the chart. In this chart I have
marked out NR7 candles in all these instances
that you can see. Each candle, if you see,
has the smallest range when compared with
last seven candles. This includes the
current candle as well. If you look at this candle
here range of this candle is the smallest among
these seven candles here. Now, NR4 and NR7
are two most common narrow range candle filters
used in day trading. It is not that you cannot use
any other narrow range filters and I would definitely
recommend for you to experiment on theses lines. I personally know couple
of really good traders who use combination
of NR7 and NR9 to trade in the stock market. So let me now introduce
you to the concept of narrow range clusters. This is one concept you will
read or hear almost nowhere. Therefore, do pay attention. Now most traders in market trade based on NR4, NR7,
or NR9 candlesticks. While all these
individually work very well, in my experience, clusters of narrow range
candles work better. A narrow range cluster is when
group of NR4 or NR7 candles come together within a span
of seven to nine candles. If you spot such
clusters on these charts always pay attention to these. These are one of the
most important formations with respect to
intraday trading. Most trading strategies revolve around single
narrow range candles and by the time you
finish this video, you would realize how important narrow range clusters
are in intraday trading. Let us now understand why
narrow range clusters work. Now, narrow range candles
represent volatility contraction and once these form on chart, these represent a period where
price does not expand much, and this is mainly
due to absence of strong players in the market. We all know that volatility
is more cyclical than price and hence once narrow range
candles form on chart, price then expands in the
direction of money flow. Now, at times, you will find
expansion quickly reverses and heads in the opposite
direction with strong momentum. I will explain in later slides how to deal with
this in real time. The important thing however
is to take note of whenever narrow range clusters
form on a chart. When you spot clusters
of narrow range candles, this represents
volatility contraction over the last seven
to nine candles and this is naturally
much stronger signal than individual
narrow range candles. Expansions usually are more
reliable and momentum oriented, after formations of clusters
and in intraday trading if you see this is what
a trader hopes for. Let us now discuss implication
of narrow range clusters in intraday trading. Now as an intraday trader,
there are specific windows when you should be trading
and when you should step aside and wait for right
opportunities. Narrow range clusters help you
identify such opportunities wherein odds of trade being
successful certainly increases. Do note that whenever you spot narrow range clusters
on the chart, implication of same remain valid for the next one to two weeks. In this chart, there
are two distinct narrow range clusters visible. First is in this region and
second one is in this region. If you look at price
movement post these clusters, you can clearly spot
more wide range candles that are visible on the chart. Now Wide range candles
are very important as far as intraday
trading is concerned, as odds of profiting
does increase with these. In this section, I
will explain few things about time frame combinations. This chart that you see is the
60 minute time frame chart. On this chart I have marked
out narrow range candles in all these regions here. Right from the outset,
it’s very clear that on intraday time frame, there are too many narrow
range candles that are visible. This actually reduces
the effectiveness of narrow range candles, as
planning a trade gets difficult. Now, if you move even
lower to 30 minute or 10 minute time
frame time frame chart, you will get too many
narrow range candles. Therefore what
I’ll recommend here is for you to stick to
daily time frame only. The way you have to execute this is to use daily time frame to
identify narrow range clusters and then use lower time frames
to trade on intraday basis. Now, I have discussed
pull back method, opening range breakout,
and VWAP indicator strategy and each can be used with
narrow range candles. In the subsequent sections I will be showing how to
combine VWAP indicator and narrow range
clusters together. In this section
let us now discuss how to identify narrow
range clusters correctly. To identify a valid
narrow range cluster, make sure you have
at least four to five narrow range candles among the
last nine candles at least. This would represent sustained
volatility contraction and would ensure
expansion in days ahead. In this chart, first
narrow range cluster is in this region wherein there are five
narrow range candles among the last 10
candles that you spot. Second valid narrow
range cluster is in this region
that I’ve marked and similarly third valid
cluster is in this region. The one common thing
you can spot right away is the amount wide range
candles post the clusters that are clearly
visible on the chart. This is what is required
in intraday trading as we are playing
for range expansion in the direction of price move. I hope this aspect is clear. Let us look at one more example to identify narrow range
clusters correctly. In this chart, there are
two regions that qualify as a valid narrow range cluster. These regions are marked here
and at this particular point. Now, these are the two regions where there are four narrow
range candles that are visibile among last seven to nine
candles on the chart. I haven’t included
these two regions here as there are only two and three narrow range candles
in this section. If you look at the
valid clusters, plenty of wide range
candles consistently show up after the cluster is formed. I have marked the
same in this region, and do take a note
of this region here. Now, this is a common occurrence and this keeps repeating
on a consistent basis. Now, as an intraday trader, you have to look out for such
clusters on a daily basis. Do remember to spot these
on a daily time frame chart and do not scan for same on
a lower time frame chart. While identifying narrow
range cluster is important, it is equally important
to identify stocks where you need to
spot such clusters. As a rule of thumb,
select only those stocks that are high beta in nature. The main reason
for this is that, you want stocks that
are high beta in nature but undergo a period of
volatility contraction. Once this phase gets over,
stock would then expand due to being high
volatile stock by nature. I hope this aspect is clear. Now, when you apply this
concept on low beta stock, the expansion phase
may not bring about same degree of expansion as
witnessed in a high beta stock. You need to also ensure that
volume expansion in stock is clearly evident
in recent times. This would actually signal presence of strong
players in the market and again, this is an essential
element in intraday trading. If you remember,
this is a concept I have covered in the stock
selection video in great detail. Link to that video will come up at top right hand
of your screen. Let me now discuss narrow range as a stock selection criteria Now stock selection is one topic where many beginners
struggle in intraday trading. If you are confused
about stock selection then look no further than narrow range
clusters for the same. I have also done a
detailed video on this and do watch that video. Now, as an intraday trader,
focus on those stocks that are forming clear
narrow range clusters. You might not get trading
opportunity the following day, but within the next
two to three sessions, stock will definitely move. In this chart if you see, I would select this stock
for intraday trading once the cluster
here gets confirmed. Once this happens, look at
how many wide range candles get plotted over
the next few days. Now, this is the
kind of opportunity that you should focus on as these are the kind of stocks that usually move
on intraday basis. So let us now begin
with a section where we will combine
narrow range clusters and VWAP indicator together. Before we get started, I’ll
recommend for you to watch the next three to five minutes at least two to three times
to understand this better. This chart that you see is
the daily time frame chart of Reliance Industries. In the last five
months if you see, there are two narrow
range clusters that are clearly visible. These clusters are were formed between June 5th and July 8th. We will be taking this
cluster into consideration, as this has marginally
underperformed, when you compare with
cluster formation here and the subsequent
price movement. If you can profit
from this cluster then profiting from this
cluster gets more easy, which is why I have
chosen this complex case. So let us now see how to use
this with VWAP indicator. Now, in order to trade
the narrow range cluster, I will show the
application of MVWAP and VWAP indicator with this. I had covered VWAP
indicator and MVWAP as intraday strategy
in a separate video. In case you have
missed the same, link to it will come up at
top right end of your screen. Now, based on the
previous chart, narrow range cluster got
completed on 16th June. Let us now see what
price did post that. On this chart, I have marked
out normal candlesticks, VWAP indicator, and moving
average of VWAP indicator. Since we have had narrow
range cluster on the chart, stock is now ready to
move either up or down. Now do note that on
based on my research whenever a narrow
range cluster shows up stock typically starts moving
with in one to two sessions. But this can be delayed at times and you should wait
for stock movement for at least three to four days. In this chart, breakdown of
price came about at this region where VWAP was below the MVWAP. Now, there is no prior
support visible here and price does move
lower with momentum. If you look at June 17th
and June 18th price action, along with June
19th price action, there were clear VWAP
short trades to be taken based on the method we discussed in the VWAP indicator video. Do note that once narrow
range cluster is in place, it is then only a matter of
time before price starts moving. Therefore, by applying
concepts of VWAP indicator once the clusters are formed, you can benefit a great
deal and more importantly, you can know when to
focus on which stock. Now, let us look at
one more example here. In this chart,
narrow range cluster is visible in this region. Out of the last nine
candles that you see there are five candles
that are narrow in range. There was also a narrow
range cluster in this region where out of 10 candles,
there were four candles that qualified as a cluster. Even post this cluster, there
were clear wide range candles that showed up on the chart. If you look at this cluster, again look at how many
wide range candles show up subsequently over
the next few sessions. Now this is what you
need to focus upon. One problem that you will face is how to mark out
clusters correctly. Now do note that
marking out clusters is a new concept for you
and be patient with this. As you practice
and see more charts you will get the knack of
marking out clusters correctly. At the early stages it
is important for you to start taking notes whenever you identify
clusters on the chart. This is the only way you
will get better at this. The cluster that we will
be studying in this example would be this
cluster marked here because this is a
more complicated case than when you compare
it with this cluster. So let us now see how
price moved post this and how one should
approach such clusters. In this chart we are again using combination of
VWAP indicator and MVWAP to capitalize on
narrow range cluster. On June 8th if you see, price
gapped lower by 100 points below near-term support level. With this gap, VWAP indicator
moved below MVWAP level. Price then moved
lower with momentum as there was no near-term
support visible on the chart. And there was clear momentum
visible on the downside and participation
was also strong as wide range candles
consistently showed up. This is again a
case on how cluster of narrow range candlesticks can be used in combination
with VWAP indicator to gain huge edge in the market. Do watch out for volume
activity as well. When price moves in the
direction of breakout, volume expansion should
be clearly visible. Similarly, when price is
consolidating post breakout volume activity
should be subdued. This actually reflects lack of
participation in this market and this is how it should be. Do keep in mind that
whether it is MVWAP and VWAP or any other intraday
trading strategy, all can be combined with
narrow range clusters. The reason why I have chosen
VWAP indicator for this series is because of its simplicity and effectiveness
in intraday trading. Let us now take
up the same chart and take this cluster
into consideration. Do note that when you
compare this cluster with the ones present here clearly this cluster is more
strong due to the presence of more narrow range
candlesticks in this cluster. You can also use
cluster strength to
short list more stocks. Now let’s assume you have two
stocks into consideration, one has a narrow range
cluster of three candles and another stock has
a narrow range cluster of four candles. Always give the second
stock more preference because clearly
that is the stock that has the strongest cluster. I hope this point is clear. In this chart, based on the
opening range breakout strategy, short trade was there to be
taken in this instrument. Refer to the opening
range breakout video to recollect the rules that
we had discussed over here. Do recollect here that narrow
range cluster is in place which meant price was in
period of volatility expansion. Once price is in the period
of volatility expansion, you should then start
looking for opportunities to go long or short
on intraday basis. Price here moved lower
below the support level. This happened with
price breaching the opening range
on the downside. Once this happened,
look at the volume when price had a breakdown and then look at subsequent
volumes that showed up. If you also look at
wide range candles here these clearly represent strong
momentum on the downside. I hope now you can
see how effective narrow range candlesticks are when it comes to
intraday trading. Let me now explain
the use of scanners in this intraday
trading strategy. Scanners do help
in narrowing down the watch list very quickly and you can use the same
for TradingView.com. As far as I am concerned, I still prefer scanning
all the charts manually. This just gives me the overall
feel of price structure and hence I prefer this method. Code for narrow range cluster is given in the
comment section below and if you use
Amibroker software, I will provide the
code for same as well. For scanning, I have
code for Amibroker and in case you need it then let me know in the
comment section below. Do watch the previous two
videos on VWAP indicator, as I have covered many
concepts in great depth. Link to all these
parts will come up at top right end of your screen. In the meantime, If there is
any doubt related to any topic, then let me know in the
comment section below no matter how basic
your doubt is. So kindly consider
hitting the like button and sharing this video
if you find it useful. Thanks a lot for watching
this video, guys. Take care and be safe.

100 thoughts on “VWAP TRADING Strategy With NARROW RANGE Candlesticks πŸ”₯πŸ”₯

  1. VWAP Trading Online Course – https://bit.ly/2P1WxRf

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  2. 1000 likes for this Vidoe. Please share the code for the Trading view to identifying NR4/7. Would be appreciating if you please make one more video on NR4/NR7.

  3. BROTHER,,,YOUR ALL VWAP VIDEOS… COMPLETELY CHANGED MY PREVIOUS WAY OF TRADING…

    VERY EXCELLENT ANALYSIS USING VWAP….

    THANK YOU VERY MUCH….πŸ™πŸ™πŸ™

  4. Little addition for the viewers on How to identify clusters???……. Whenever BB forms into the KC the cluster formation commences. It may be on one side of BB Or the both side. Latest example of Reliance & Mindtree. ON investing.com BB= Bolinger Band, KC = Keltner Channel.

  5. Thanks for explaining the narrow range concept.

    Quite logical as the volatility contracts and then expands.

    Will try to practice.

  6. Please help us to select a software for trading 2, I am not able to find relative strength indicator in none of the online software. Thanks for your wonderful videos and help

  7. Hi Guruji, once again, and i am 10q to you for uploading very useful video. your one of the best knowledge bank in the world, so i am requesting to you make video on trading view coding, it will be more interesting video.

  8. Sir Please give the link of the tradingview indicator for nr candles. I cannot fiind it in the description of the video.Thanks a lot for the video.

  9. thanks for posting narrow range candle, any software or indicator that can plot narrow range candle automatically on Sierra chart or Ninja trader or trading view, The best is trading view as i am using it , please show me where to look for plot narrow range candle chart , Thanks, WO

  10. Stock market is ocean of opportunity and wealth. At the same time , it has big sharks as well. You are the person like light house which gives hope and direction to be survived. God bless you with all happiness and prosperity.

  11. Sir, I have been watching all your videos which are well explained and easy to understand.
    For NR4 and NR7 we can also refer Fatafat intraday Stock screener wherein all stocks are covered. By using the filter we can segregate list of NR4 and NR7 stocks for making a watchlist and verify practically as explained by you in this video. Sir, there is no link code provided for Trading view. Kindly provide. Thanks once again. Regards

  12. Hello Sir,

    Thanks for another amazing video.
    I am using Nr4/Nr7/NR21 as part of my trading.

    Just wanted to know that afl you mentioned was for scanning of NR candles or for scanning of clusters?

    As I already have afl for NR candles, would be really helpful if you can share afl for NR clusters.

    Thanks again

  13. Thanks for the video STπŸ™. I have one question regarding stock selection with respect to beta. Regardless of beta our risk is going to be the same. If so, why we emphasize on high beta?. Am I missing something here?. Would be grateful if you could clarify.

  14. I am really impressed with the efforts you put into making this video's.But as retailers how can we work on different strategies and expect them to make money for us.
    I am working on Only two strategies since last 2 years and currently in phase of sizing.
    So I think it is better to sharpen your skills with the basics strategies we have and then start working on sizing.
    Rest we need to be psychologically well enough to start day trading/swing trading.

  15. very well explained Sir.. I have read most of the things you cover but your explanation makes it better to understand and its practical application.
    keep coming up with such great videos… Thanks a ton.

  16. SIr I could not able to understand hoe to use code and paste. nr 4 means narrow 4 candles bunch, and nr 7 is bunch of narrow 7 correct me if i am wrong

  17. Wow you show nr concept with new details which no one share with others. Can we get amibroker afl scanner afl for same

  18. Good one Ron, thank you for sharing your knowledge. I guess many sell such techniques at a huge premium. You are doing a good work.truly appreciate it. Do you also plan to do such videos in Hindi ?. That way your viewership will grow by leaps and bound. I am sure i am not the first one to recommend it. Have a good weekend.

  19. Your way of analysis and explaining the concepts tells about extent of passion on profession. Simply superb.

  20. Hi,

    As per the chart nifty broke the previous channel,now it is forming new channel as 11300 resistance and somewhere around 10000 as support….what is your view on this(image attached) your input is most crucial for all of us

    https://www.tradingview.com/x/2QGniA5f/

  21. It would be great if you can state the logic in simple language with IF,AND & OR, so that I could code it in Chartink(if it is at all possible to do so and If it is within my capability)…thanks.

  22. your stuff r really awesome. u explain the concept threadbare. even a newbies can understand it. very effective teaching.

  23. Hi,

    my apologies for too much trendlines,below 2 snap shots provided on different trendline,both are suggesting the major trendline is broken and lower channel is forming(green colour)..your thought on this

    https://www.tradingview.com/x/krip64jJ/

    https://www.tradingview.com/x/xBkZBoEz/

  24. How to find or derive the high beta stocks?
    The stocks with high volatility is defined as high beta stocks or the one which is more relative to index movement is conseidered a high beta stock?
    How to find these high beta stocks on wat metrics?

  25. Hi, I really enjoy your videos, the strategy and the efforts you put into making these video. Your explanation makes it easy to understand and apply it practically.
    My humble request to make a video on risk management and money management while trading.

  26. Hi ST..Had the code for NR7 on Tradingview..Whenever i used to view daily charts i used to see these clusters but never thought of making a strategy out of it. And combining that with VWAP was out of question..Anyways would study this technique now and try it out with only 5 -7 High beta stocks.

  27. sir how to use narrow range in TRADINGVIEW site. and pls let me know how to get Amibroker AFL for narrow range Thanks

  28. @tradewithtrend bro wats news in coffeday y upper ckt??? i c it as a trap for retailers…wat do u think ..wanted your advice..

  29. Hi…A very nice video explaining Narrow Range Cluster. After a NR cluster, as discussed by you in the video, we get Range Expansion for a few days. In that will it not make more sense to hold on to the trades for a few days than trading intra day? In that case, which strategy will you recommend after identifying a Cluster of NR candles? How do we trail stops in that case and also how to book partial profits?

  30. HI, thanks for posting, the narrow range candle cluster, is easy to see and use, BUT could you explain after i see the cluster, any indication or indicator to watch to know if the market will up or down after the cluster, Now , i know something big either up or down will happen , but not sure which direction . please comment at your convenient. Thanks

  31. SBIN looks ineresting using NR4 & NR7 INDICATOR
    On daily timeframe sbin has a cluster (chart link) :- https://ibb.co/1RGR3y7
    On a broader level there trendline as well :- https://ibb.co/kXWyDhk
    On a hourly time frame there is a channel looking pattern :- https://ibb.co/Fx7gB2Z
    270 Strike price has huge amount of open interest as well.
    I am having a bullish view in SBIN in a few days.
    would love to hear from you. Thank you so much for making videos for us and replying to each and every comment. You are a very humble guy. Wish you more success is life. Thank you so much sir really appreciate it.

  32. Bhai, really doing amazing work. Keep it up…..!!!!

    Please make detail video on how to draw trend line properly and also support and regitance lines.

  33. Very informative video….I guess for NR7 breakouts (the powerful ones) one needs to keep a watchlist active for atleast one week & track the breakout breakdown on daily basis… such breakout not only give good intraday trades but very less risk entries for swing trades as well.

  34. Sir, I did trade using vwap.

    Need to know Whether the approach this is right or not?

    Only if time permits.
    Thanks.
    https://invst.ly/bur8-

  35. Sir, I am not able to ask or reply to the comments under the community of our channel.
    I have to ask one thing on the comment that you were mentioning about trade management, in intraday the SL hunting by HNI's or any big fish is inevitable.
    I do place a wide SL most of the times as I expect price will come hit my virtual SL and ends in profit but in the other case that one trade which hits my SL takes the profit of other four trade.
    Kindly advise what is the ideal way to handle this scenario?
    TIA πŸ™‚

  36. VERY GOOD.. learning a lotfrom u.. i need open =high , open =low stratagy, lot of times it is failing.. but still people saying it is good…, what are the additional things we should add for getting good results with that.

  37. Is there any difference between MVWAP and 50 oriod EMA with VWAP. If they r different..where is that MVWAP is available.

  38. Amazing VT. Well explained and I really appreciate your sincere effort on making this video. I am using Amibroker can u pls share the code. Many Thx

  39. I won't even try to thank you , its really can't do any justice to your efforts.
    Very few people are there who could do something for others.

    You are one of them….

    My questions:
    Can I use NR7 & NR9 or NR9 &NR11 combinations for Cluster?
    How can I edit this in Pine Editor?
    Can I become Trading View 's paid member from India?

    Regards.

  40. Thank you for your videos. They are great and has contributed to my trading tremendously. I understand that narrow range clusters are better on the daily. My question is. Can you use the NR4 and NR7 on 15-min charts successfully?

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