Simple Inside Bars

This is a discussion on Simple Inside Bars within the Trading Journals forums, part of the Reception category; Originally Posted by skelly22 Hey Foredog Nice to see an inside bar thread. Are you going to trade Cable only ...

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Old Nov 6, 2008, 7:19am   #17
 
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Originally Posted by skelly22 View Post
Hey Foredog

Nice to see an inside bar thread. Are you going to trade Cable only or will you add a few more of the major pairs? I try to watch about 6 or 7 of the bigger pairs.That said the only IB i took today was on EURCHF, first i went short, then long on the failed breakout. That has since retraced so out at be. Have you set yourself a limit on the size of the inside bar? I know soon prefer only the smaller ones as the breakout seems to be a bit more vigorous so that maybe worth considering.
Shane
Hi Shane

At the moment i'm just doing GBPUSD, so as there's not too much to look at.

I know what you mean about the size of the Bars, i hadn't really considered that, maybe i'll have to add a rule of the bar being max x pips?

Thats the benfit of demo though, we can discover things without getting hit in the wallet!
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Old Nov 6, 2008, 3:44pm   #18
 
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foredog started this thread No trades today, there have been no inside bars so far on my charts, although some were close, maybe this is a good thing with the BOE etc today.

The bars that wasn' this morning would've produced a small profit but not as much as we'd like and maybe not worth the risk........

Not quite the start i hoped for but the markets will still be here tomorrow (although another few months like October and some may not!!!!)
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Old Nov 7, 2008, 11:13am   #19
 
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foredog started this thread Thanks you all, i'd love to receive the award for dullest diary on T2W!!!

3 days in and no trades....

But i've chosen a setup that should over time produce good Risk:Reward when the correct trades are taken, this means only the right trades, not ones that are sort of Ib's but i've got a hunch etc

so at the moment the lessons are discipline and patience.

Cheers
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Old Nov 7, 2008, 11:57am   #20
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. . .so at the moment the lessons are discipline and patience.
These are always the lessons - each day - and not to trade when there are distractions around. Yesterday, I had builders in the house and I briefed them before the market opened. An hour and a half in, I take my first (long) trade. A minute later, there's a knock at the door, the builder has a question. I quickly put on a stop order and go and sort the builder out. I return 2 minutes later to find my stop has been hit. Only problem is I placed a stop buy order instead of a stop sell order, so I'm still in the trade but at twice the correct size and price is going against me. I close immediately for a loss 4 times greater than it should have been. All because a builder wanted to know where I wanted a towel rail in the bathroom! I'm not blaming the builder (who's a very nice chap) - it's my own stupid fault. Very embarrassing too, so I don't really know why I'm posting for all to read here. I guess I hope that someone might learn from my expensive and incredibly stupid, kindergarten mistake!

Tim.
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Old Nov 7, 2008, 12:14pm   #21
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I only posted the above after reading foredog's post, but actually intinded to post an explanation of my earlier comments about inside bars. I wrote this in response to an e-mail, but thought it might be of interest to others . . .

Looking at the attached chart (picked at random):
What I call the 'Holding candle' HC has a high / low of 28.58 and 23.31 respectively. To recap, the HC is the candle whose high and low are outside the high and low of the subsequent inside candle (IC). Without the HC, there is no IC. The gold line is the 5WMA that I mentioned in the earlier post. The purple lines are displaced moving averages based on ATR and provide a visual prompt as to where to take - or not take - a trade. I want to enter as tight as possible to the gold 5WMA, so I won't enter a trade if price is outside the purple lines; i.e. I won't go long if price is above the upper purple line or short if price is below the lower purple line. A long trade is indicated 3 candles after the HC, - the first red circle. (Had price fallen sharply and breached the low of the HC, I wouldn't have gone short as price is outside the lower purple line.) So, I'm long above 28.58 and price moves as expected to start with. However, it pulls back and closes at 28.50, back 'inside' the HC. This is a failed breakout and experience tells me that price is more likely to fall further than it is to rise back up in the direction of the original trade. So, I'd close right there for -8 cents (plus comm's and fills). Very often, when this happens, a good short entry would be the breach of the low of the failed breakout candle - the second circle. Stop placement is discretionary. As a starting point, I generally look to the breach of the other end of the HC. However, in this example, I'd probably have placed it around the low of the 2nd inside candle at 26.00. Please note than this example is poor as it isn't in the context of trend, market sentiment, S/R etc. which, if factored in to the trade, will increase the probability of success. E.g. - note the penultimate candle on the chart that is also a failed breakout candle. Although the HC and two subsequent IC's have highs around 31.60, the round number at 32.00 is just overhead (potential resistance) and price is close to the upper purple line, so it's not a high probability set up. However, had I taken it, I'd have set my stop at the low of the HC at 28.20, but exited when the breakout failed and price closed back inside the HC at 30.59. I'd only have lost $1.00 per share by doing this, instead of a potential $3.00 per share loss if/when price breaches the low of the HC and my stop is triggered.
Tim.
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inside-candles.gif  
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Old Nov 7, 2008, 1:04pm   #22
 
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foredog started this thread Potential Setup (at last)

11am range 15702 -15815

12 range 15718 - 15815 (97 pips)

We have taken 15647 as the open so we will only look to go long.

buy stop placed at 15819 , stop at 15714 for 2.85 contracts ( $300 / 105)

will cancel order at 1400 if not filled
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Old Nov 7, 2008, 1:07pm   #23
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If one only looks at the candlestick pattern of simple inside bars, to make money and base entries off, they are passing up many other good opportunities to make $.
Look at a chart - be it a 5min 15min etc, and see what the high low oopen close are doing in comparison to the last candle, on the candle which marked the change in direction, and which "pattern"/trend consistently leads to profit potential.
Add a bit of S/R - Happy Days!
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Old Nov 7, 2008, 1:18pm   #24
 
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If one only looks at the candlestick pattern of simple inside bars, to make money and base entries off, they are passing up many other good opportunities to make $.
Look at a chart - be it a 5min 15min etc, and see what the high low oopen close are doing in comparison to the last candle, on the candle which marked the change in direction, and which "pattern"/trend consistently leads to profit potential.
Add a bit of S/R - Happy Days!

All true but this is just to show one simple method that is fairly easy to recognise and use.

I'm sure that if you just used this method over a few pairs then it would throw up enough signals to produce a healthy income.

Not tested that yet though!
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