The NRTR, or Nick Rypock Trailing Reverse, is an intriguing tool for traders looking to capitalize on market trends. At its core, the NRTR keeps a set distance from the price extremes reached on the chart—it's positioned below the price levels during rising trends and above during falling ones. The underlying concept here is simple: while minor corrective movements against the main trend should be dismissed, significant movements that cross a certain threshold (defined by the moving filter K) indicate a potential trend reversal.
This indicator operates using a dynamic price channel. It only considers prices from the current trend while excluding extremes from previous trends. The NRTR consistently maintains a specific percentage distance from these extremes, which helps traders identify potential entry and exit points effectively.
How the NRTR is Calculated
For rising trends, the NRTR formula is:
- NRTR = Highest(Close, period) * (1 - (K / 100))
And for falling trends, the formula changes to:
- NRTR = Lowest(Close, period) * (1 + (K / 100))
In these formulas, the first part identifies the highest or lowest price extremes reached during the last time the prices crossed the NRTR indicator. The variable K reflects the percentage distance from these extremes, acting as a moving filter.
Like many trading indicators, the NRTR shines in trending markets but can become misleading in sideways or non-trending conditions. Therefore, it's essential to use it in conjunction with other analysis methods to enhance accuracy.
If you’re looking to dive deeper into the properties and variations of the NRTR indicator, check out Konstantin Kopyrkin's detailed article on the subject. You can find it here: Trend Indicator of Breakthrough of the Dynamic Price Channel (Modern Trading, No. 4, 2001).
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