The strategy NR4/IB is basically a intraday trading technique which was developed by the traders Lawrence A. Connors and Linda Bradford Raschke and released in their book "Street Smarts". The meaning of the letters NR4/IB is "Narrow Range Bar 4Bar/Inside" and each time this pattern is detected there is a high probability that the market will produce a strong movement after the breakup of the formation. Basically, this pattern consists of a series of four bars or candles in which the fourth candle has two very important conditions:
- Condition 1: The last bar or candle (also called NR4) must have a minimum and a maximum lower than those of the three previous bars, which means that is a narrow bar as it is trapped within the range of the previous bars.
- Condition 2: The NR4 bar must not exceed the maximum or minimum of the bar that precedes it, which makes it what is known as the "inside bar".
In order to better understand the concept of the NR4 bar the following chart shows an example indicated by the white arrow (Click on the image to enlarge):
Trading system description
|Name||NR4/IB technique for intraday trading|
This trading technique is based on a well known and reliable bar pattern known as NR4/IB. It was developed by two famous traders and can be used to trade in any market mainly for intraday trading. As with other chart patterns is not foolproof, but with the proper money managment can be quite profitable.
|Instruments||This famous chart pattern can be used to trade with any instrument, including currency pairs (Forex Market) and shares for example. It could be necessary to make certain changes to the strategy depending on the market.|
According to the authors, the most appropiate technique to trade with the NR4/IB pattern is the following:
The following example can be seen NR4/IB bar from which one develops a strong upward movement: