Negative Seven Spread (N7) is an advanced trading and investing strategy developed by Laurence A. Connors and Linda Bradford Raschke. It is designed to capture small price movements in the market by entering and exiting trades within a short time frame. N7 is one of the most popular trading strategies used by traders, particularly those who use technical analysis.
N7 is based on the idea that markets tend to move in a range, and that if a trader can identify the range, they can take advantage of price movements within that range. Traders look for a specific signal to enter a trade and then look for a similar signal to exit the trade. This signal is known as the N7 spread.
Understanding the N7 Spread
The N7 spread is the difference between two price points – the entry point and the exit point. Traders use the spread to identify the range within which the market will move. The spread is calculated by subtracting the entry point from the exit point. If the difference is negative, then it is referred to as a negative seven spread.
The N7 spread is used to determine when to enter and exit trades. Traders look for a signal that the market is going to move in a certain direction, and then they enter a trade in that direction. If the market moves in the opposite direction, the trader will then look for a similar signal to exit the trade.
How to Use the N7 Spread
To use the N7 spread, traders must first identify the range within which the market is likely to move. This can be done by looking at charts and other technical indicators. Once the range is identified, the trader can then look for a signal to enter a trade. This signal is typically a break in the range, either above or below the range.
Once the trader has entered the trade, they will then look for a similar signal to exit the trade. This signal is typically a retracement of the initial move. If the price retraces to the original entry point, the trader can then exit the trade. This will result in a negative seven spread.
Advantages of the N7 Spread
The N7 spread is a popular trading strategy because it allows traders to take advantage of small price movements in the market. By entering and exiting trades quickly, traders can capture profits in a short amount of time. This also reduces the risk of being exposed to the market for an extended period of time.
The N7 spread also offers traders the opportunity to diversify their trading strategies. By using the N7 spread, traders can enter and exit trades in different markets and different time frames. This can help traders manage their risk and maximize their profits.
Conclusion
Negative Seven Spread (N7) is an advanced trading and investing strategy designed to capture small price movements in the market. Traders use the N7 spread to identify the range within which the market is likely to move and to enter and exit trades quickly. This strategy offers traders the opportunity to take advantage of small price movements and to diversify their trading strategies.