Normally INSIDE BAR will give us two trade
1. the first trade is to trade at the breaking out
2. the 2nd trade is to trade after the breakout + pull back
the first trade normally can quickly take you to 1:1 risk/reward
the 2nd trade can give you a higher R/R
WHAT IS AN INSIDE BAR?
If you are wondering what an inside bar is, then here’s an explanation.
- the inside bar is a 2 candlestick formation
- the first candlestick that forms may be called the “mother candlestick”
- the second candlestick that forms after the “mother candlestick” is engulfed completely within the shadows of the mother candlestick . That second candlestick is called the “inside bar.
- the preceding candlestick can be either a bullish or bearish bar ( candlestick ).
- the inside bar itself can be bullish or bearish candlestick .
WHY INSIDE BARS FORM?
Inside bars, when they form show a time period of market consolidation. This market consolidation can be due to:
- a time of indecision as traders are figuring out if they are going to buy or sell or not
- a period of low trading activity (low trading volume )
- it can also be a time where the bulls and bears of market forces are also almost of equal strength and each really don’t know what direction to take on their trades.
Where Do Inside Bars Form?
Well, inside bars can form anywhere. But the inside bars that are of significance that many traders take notice of must form on these level(areas) listed below:
- support
- resistance
- pivots
- Fibonacci levels
- trend line touch areas
Its best to only pay attention to inside bars that form in the price levels listed above.
INSIDE BAR FOREX TRADING STRATEGY RULES
Selling Rules:
- the market must be in a downtrend.
- when you see an inside bar form, then place a sell stop order anywhere from 2-3 pips below the low of the inside bar . You do that soon as that that inside bar closes.
- For Stop loss, place it anywhere from 5-10 pips above the high of the inside bar .
Buying Rules:
The buying rules for the inside bar trading strategy are just the exact opposite of the selling rules. Here they are:
- the market must be in an uptrend.
- when you see an inside bar form, then place a buy stop order anywhere from 2-3 pips above the high of the inside bar . You do that soon as that that inside bar closes.
- For Stop loss, place it anywhere from 5-10 pips below the low of the inside bar .
DISADVANTAGES OF THE INSIDE BAR FOREX TRADING STRATEGY
- false breakouts do happen and you will get stopped out as price reverses and hits your stop loss.
- avoid trying to use smaller timeframes to trade inside bars, there will be too many “noise” and false signals.
ADVANTAGES OF THE INSIDE BAR FOREX TRADING STRATEGY
- pure price action trading
- if you trail stop your trades to lock in profit as shown in the previous chart above, you can make a lot of profit if the trend is strong.
- if you trade using the daily chart , you need only a few minutes each day to check your chart, place your pending order (when you spot an inside bar ) and walk away. Check later during the day to see which pending - - order was activated then cancel the other that was not activated.
- its a very easy candlestick pattern to spot, even a housewife who has no prior experience in trading forex can use this system and make money trading forex.
1. the first trade is to trade at the breaking out
2. the 2nd trade is to trade after the breakout + pull back
the first trade normally can quickly take you to 1:1 risk/reward
the 2nd trade can give you a higher R/R
WHAT IS AN INSIDE BAR?
If you are wondering what an inside bar is, then here’s an explanation.
- the inside bar is a 2 candlestick formation
- the first candlestick that forms may be called the “mother candlestick”
- the second candlestick that forms after the “mother candlestick” is engulfed completely within the shadows of the mother candlestick . That second candlestick is called the “inside bar.
- the preceding candlestick can be either a bullish or bearish bar ( candlestick ).
- the inside bar itself can be bullish or bearish candlestick .
WHY INSIDE BARS FORM?
Inside bars, when they form show a time period of market consolidation. This market consolidation can be due to:
- a time of indecision as traders are figuring out if they are going to buy or sell or not
- a period of low trading activity (low trading volume )
- it can also be a time where the bulls and bears of market forces are also almost of equal strength and each really don’t know what direction to take on their trades.
Where Do Inside Bars Form?
Well, inside bars can form anywhere. But the inside bars that are of significance that many traders take notice of must form on these level(areas) listed below:
- support
- resistance
- pivots
- Fibonacci levels
- trend line touch areas
Its best to only pay attention to inside bars that form in the price levels listed above.
INSIDE BAR FOREX TRADING STRATEGY RULES
Selling Rules:
- the market must be in a downtrend.
- when you see an inside bar form, then place a sell stop order anywhere from 2-3 pips below the low of the inside bar . You do that soon as that that inside bar closes.
- For Stop loss, place it anywhere from 5-10 pips above the high of the inside bar .
Buying Rules:
The buying rules for the inside bar trading strategy are just the exact opposite of the selling rules. Here they are:
- the market must be in an uptrend.
- when you see an inside bar form, then place a buy stop order anywhere from 2-3 pips above the high of the inside bar . You do that soon as that that inside bar closes.
- For Stop loss, place it anywhere from 5-10 pips below the low of the inside bar .
DISADVANTAGES OF THE INSIDE BAR FOREX TRADING STRATEGY
- false breakouts do happen and you will get stopped out as price reverses and hits your stop loss.
- avoid trying to use smaller timeframes to trade inside bars, there will be too many “noise” and false signals.
ADVANTAGES OF THE INSIDE BAR FOREX TRADING STRATEGY
- pure price action trading
- if you trail stop your trades to lock in profit as shown in the previous chart above, you can make a lot of profit if the trend is strong.
- if you trade using the daily chart , you need only a few minutes each day to check your chart, place your pending order (when you spot an inside bar ) and walk away. Check later during the day to see which pending - - order was activated then cancel the other that was not activated.
- its a very easy candlestick pattern to spot, even a housewife who has no prior experience in trading forex can use this system and make money trading forex.
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