Simple Inside Bars

This is a discussion on Simple Inside Bars within the Trading Journals forums, part of the Reception category; Also (basic question I know) should I be looking at the high/low or open/close for the bar period?...

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Old May 9, 2009, 11:05am   #111
 
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Also (basic question I know) should I be looking at the high/low or open/close for the bar period?
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Old May 9, 2009, 3:08pm   #112
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Hi Jon,
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Using this inside bar method to identify reversals is there an optimum time-frame for GBP/USD??
It's also a good continuation pattern and not just a reversal pattern. If you're new to trading (and you come across as someone who is), I'd recommend you trade continuation patterns rather than reversals which are much higher risk. Certainly, inside bars in and of themselves are insufficient to trade reversals with IMO, and will almost certainly result in loss overall. Continuation patterns are - relatively speaking - safer because a trend has already been established and you're merely looking to jump on board at a suitable point - just like catching a bus. As for timeframes, that very much depends on you, your style and your temperament. If you're new, start with the longer T'F's, i.e. daily, perhaps 4 hour and nothing under 1 hour.

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Also is there a preferred indicator to use in conjunction?
There are no stock answers to questions like these. It's whatever works for you. If you're determined to trade reversals and you want an indicator to help pinpoint them, then you might try an oscillator like RSI which will help to identify overbought or oversold conditions.

Your additional question in the next post I'd say the same thing to - you decide what works best for you. That said, most traders use the high / low but, then again, most traders don't make any money.

Tim.
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Old May 9, 2009, 7:59pm   #113
 
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Using this inside bar method to identify reversals is there an optimum time-frame for GBP/USD?

Also is there a preferred indicator to use in conjunction?
This isn't a golden rule ...but....


if the market is in a downward trend but is pulling back then the IB may be a reversal signal. other than that it's probably better to look for continuation.

BUT as TIMSK says it's what works for you.
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Old May 9, 2009, 8:18pm   #114
 
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Thanks for the advice.

You've helped me identify exactly where I'm going wrong, I've been trying to outsmart the trend and identify reversals.
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Old May 9, 2009, 9:06pm   #115
 
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This isn't a golden rule ...but....


if the market is in a downward trend but is pulling back then the IB may be a reversal signal. other than that it's probably better to look for continuation.

BUT as TIMSK says it's what works for you.
Just been looking at Peter Crowns' blog.

Hmm, so basically buy on the next break upwards, or sell on the next break downwards, AFTER the IB is fully formed.

So it's actually irrelevant as to whether a reversal or continuation pattern is taking place.

Am I getting it yet?

OK gonna try this next week on the pound/dollar with low risk spot minis and based on Tim's advice I'll use 1 hour charts.

Also what does the D and S in DIBS stand for? and what is the relevance of the next move being above or below the session open?

Sorry for all the questions...
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Old May 9, 2009, 9:30pm   #116
 
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Just done some very brief back testing and this seems to work really well in trends (both continuation and reversal points) but not so well in periods of tight consolidation punctuated by narrow bars.

Anyway, I'm looking forward to trying it out and getting the live results next week.

Just a couple of other items; lets say hypothetically we get an upside breakout from a fully formed 1hr IB and yet PRICE REMAINS BELOW THE DAY'S OPEN, does this mean that we DO NOT take the trade because a long buy position would be against the day's sentiment (day's sentiment remains bearish because it is trading in the red and only becomes bullish when it is trading in the blue) and obviously vice versa??

Does the trade have to take place in the first 9 to 10 hrs of the trading day (why does this increase the probability of success)? and are there any other important parameters that I'm missing here?

Anything else you guys want to add would be mightily appreciated and thanks in advance.

Last edited by jon1971; May 10, 2009 at 7:50am.
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Old May 10, 2009, 11:16am   #117
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Anything else you guys want to add would be mightily appreciated and thanks in advance.
Only one thing, Jon -
whatever you do, don't use real money to test this! If you do, you'll probably win which, in your case, is the worst possible outcome. You'll think you've found the holy grail (believe me when I say you haven't) and then you'll go and lose a much larger amount than you initially won. As things stand, you're gambling - not trading.
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Old May 10, 2009, 11:31am   #118
 
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Only one thing, Jon -
whatever you do, don't use real money to test this! If you do, you'll probably win which, in your case, is the worst possible outcome. You'll think you've found the holy grail (believe me when I say you haven't) and then you'll go and lose a much larger amount than you initially won. As things stand, you're gambling - not trading.
Tim.
Yeah understood Tim,

I've been trading FTSE stocks for some time, but you're quite right I am brand new to Forex. Started last week on the pound dollar and made a $700 gain on the first day, spent the rest of the week trying to replicate it, giving it all back in the process and then some.

Can't say that I won't if I get a good high probability set-up, but I'll defo try. I get the whole "holy grail" thing.

Cheers...
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Old May 10, 2009, 1:43pm   #119
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Just keep in mind that if you play an IB as a continuation pattern straight into a level you will get topped and tailed.
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Old May 10, 2009, 6:31pm   #120
 
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Quote:
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Just done some very brief back testing and this seems to work really well in trends (both continuation and reversal points) but not so well in periods of tight consolidation punctuated by narrow bars.

Anyway, I'm looking forward to trying it out and getting the live results next week.

Just a couple of other items; lets say hypothetically we get an upside breakout from a fully formed 1hr IB and yet PRICE REMAINS BELOW THE DAY'S OPEN, does this mean that we DO NOT take the trade because a long buy position would be against the day's sentiment (day's sentiment remains bearish because it is trading in the red and only becomes bullish when it is trading in the blue) and obviously vice versa??

Does the trade have to take place in the first 9 to 10 hrs of the trading day (why does this increase the probability of success)? and are there any other important parameters that I'm missing here?

Anything else you guys want to add would be mightily appreciated and thanks in advance.

Following Peter CRowns method (Daily Inside BarS) you would only take a short in a currency trading below the 6am GMT open and a long above, if you choose to do different then that's your system.

The reason for the first 9hrs is that is when most of the trade in those crosses happens.

Also not all the Inside bars are the same. As you stated you want ones in a trend not in the channels.
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