NR7 Breakout
NR7 Breakout is a volatility-breakout strategy that plays the classic "low volatility precedes high volatility" idea.
NR7 Breakout is a volatility-breakout strategy that plays the classic "low volatility precedes high volatility" idea. It waits for an NR7 bar - a day whose High-Low range is the narrowest of the last seven - and buys the breakout when price then closes above the prior bar's high, betting that the range contraction is coiling for a directional expansion. It exits on a close below the prior bar's low. It is one of Toby Crabel's classic setups.
It is an easy, low-volatility → trending, daily swing-trading strategy.
How it trades
| Ingredient | Meaning |
|---|---|
| NR7() | 1 when the current bar's range is strictly the narrowest of the last 7 bars, else 0 |
| High(1) | The previous bar's high - the breakout level |
| Low(1) | The previous bar's low - the failure/exit line |
Buy (breakout from a narrow-range bar):
NR7() AND Close > High(1)
Sell (breakdown below the prior low):
Close < Low(1)
NR7() is a boolean flag - it is used bare, without a comparison. High(1)/Low(1) are look-back accessors: the high/low of the bar n bars ago (distinct from the bare High/Low price fields, which always refer to the current bar).
When it works best
Best where a genuine range contraction resolves into a real directional move. Its documented weakness is many false signals: a narrow-range day followed by a one-bar poke above the prior high often fails to follow through, so without additional trend or volume confirmation the strategy takes a lot of small losing breakouts in choppy conditions.
Backtest this strategy yourself
Build these rules on the Free plan, adjust them, and see how they would have traded.