Guide · Breakouts & channels
Does NR7 Breakout work?
Across 375 stocks, NR7 Breakout cut the worst fall on 71%, beat buying and holding on risk-adjusted return on 14% and on raw return on 14%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
An NR7 day has the narrowest high-to-low range of the last seven. Quiet days tend to come before big moves, so buy a close above that day's high and sell a close below its low.
- An NR7 day's range is smaller than each of the 6 days before it.
- In when a later close is above the high of the latest NR7 day.
- Out when a later close is below the low of the latest NR7 day. Each new NR7 day resets both levels.
Breakouts & channels plays bet that when price escapes the range it has held for weeks, the move that follows tends to run. The family guide
How to use it
- It trades often (about 31 switches a year per stock), so costs, spreads and taxes eat into it more than the backtest's 0.05% per switch suggests.
- Expect to be wrong more often than right: only 33% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Energy & power (24% beat holding on risk-adjusted return) and worst on Semiconductors (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
NR7 Breakout did best against holding in the COVID drop (+24% median gap) and worst in the 2020–21 rally (−30%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| NR7 Breakout | +8% | −12% | +24% | −30% | +5% | −12% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Energy & power | 24% | -0.18 |
| Industrials & rentals | 22% | -0.17 |
| Media & telecom | 20% | -0.23 |
| Micro caps | 17% | -0.21 |
| Real estate | 16% | -0.18 |
| Industrials & materials | 16% | -0.24 |
| Financials | 15% | -0.18 |
| Software & devices | 12% | -0.27 |
| Healthcare | 11% | -0.26 |
| Consumer & retail | 9% | -0.38 |
| Metals & mining | 8% | -0.29 |
| Sectors | 0% | -0.54 |
| Indexes & ETFs | 0% | -0.41 |
| Big tech | 0% | -0.27 |
| Semiconductors | 0% | -0.36 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
NR7 Breakout holds 199 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.