Simple Inside Bars

This is a discussion on Simple Inside Bars within the Trading Journals forums, part of the Reception category; It’s a price (action) observation that is as old as the hills. I’m not sure how you’ll go on with ...

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Old Nov 8, 2008, 8:23pm   #31
 
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It’s a price (action) observation that is as old as the hills.
I’m not sure how you’ll go on with triggering it off that particular chart reference, but the concept of gunning inside & outside edge bars on positive (negative) flows is a simple, effective driver. Team them up with visible support-resistance (buy/sell pressure points) & you got quite a powerful template to play with.

I work alongside a fella who has operated one of his long-range engines via a weekly/daily combo for years, with excellent risk to profit tolerances.

Example below.

One of the positives of legging in via the higher timeframe templates is you get plenty of time to weigh up the each-way odds of compounding a strong momentum play, whilst minimizing costs. You also suffer less from (fake out) 2 way intraday vibrations, which will be one of your major annoyances on that small timeframe.
Anyhow, good luck with it.

grey lines are buy/sell pressure zones
red line is the trigger off a (typical) big figure launch

Click the image to open in full size.

Last edited by Hawkmoon; Nov 8, 2008 at 8:30pm.
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Old Nov 8, 2008, 10:54pm   #32
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Quote:
Originally Posted by Hawkmoon View Post
Team them up with visible support-resistance (buy/sell pressure points) & you got quite a powerful template to play with.

You also suffer less from (fake out) 2 way intraday vibrations, which will be one of your major annoyances on that small timeframe.
Keying in off the key wkly-daily (s/r) zones via his hourly frame will reduce the false starts on these inside plays, especially if they’re managed via pullback entries.

There aren’t too many on here keen to play off the larger frames on the currencies Jimmy.
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Old Nov 9, 2008, 12:32am   #33
 
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Keying in off the key wkly-daily (s/r) zones via his hourly frame will reduce the false starts on these inside plays, especially if they’re managed via pullback entries.
They will to a certain extent sure. Thing is Anna, even via a 60min view there’s usually a whole stack of choppy 2-way flow snapping at your heels most every goddamn day.

That inside (& outside) bar kicker is a fair leg into a decent pitch off the key levels, but on the lower timeframes you’re pissing your risk up against the wall a good percentage of the time, particularly recently with the low level liquidity & patchy order flow.

I don’t see any favorable risk-cost advantage at all if you got to spend half your time re-calibrating (& financing) washed out trades?

It’s a decent piece of kit to have in your pocket, but I’m not convinced it’s a viable play on these gambling timeframes.
It’ll be interesting to see how this experiment plays out.

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Old Nov 9, 2008, 11:40am   #34
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Hi Hawkmoon,
For the benefit of those subscribers to the thread who aren't that quick on the uptake (i.e. me!), could you explain the significance of the IB's marked 'A' Vs the IB's marked 'B' on your chart please?
Cheers,
Tim.
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Old Nov 9, 2008, 12:13pm   #35
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Originally Posted by timsk View Post
Hi Hawkmoon,
For the benefit of those subscribers to the thread who aren't that quick on the uptake (i.e. me!), could you explain the significance of the IB's marked 'A' Vs the IB's marked 'B' on your chart please?
Hi Tim
He’s not around for a couple days so I’ll step in if it’s ok?

Those potential reaction zones (lines) he put up on the big frames are taken off his weekly reference chart.
They can then simply be cascaded down so they print on any timeframe reference of choice as price begins vibrating on & around the level – they’re just watch zones if you like.

What he’s getting at regards triggering a lower timeframe inside bar (or any other price action trigger come to that) is the fact you might obtain keener value or lower potential risk if you use the “much observed, obvious” reaction levels such as s/r, buy-sell pressure & big figure zones etc to execute your orders, rather than get caught in mid-stream where most of the herd tend to conduct their business.

Orders & transactions consistently get attracted to these common magnets up & down the ladder, especially big figures/key swings & highly visible levels.

By grading the set-ups & trying to execute your game plan on & around the higher potential r/r tickets (such as that s/r level he earmarked with his A grade highlighter) you just might remain seated a little longer & thus gauge the risk-profit percentage of your book as price gets flipped back & forth thru it’s supply-demand chain.

Hope that helps.
Anna-Maria.
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Old Nov 9, 2008, 4:42pm   #36
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Quote:
Originally Posted by ampro View Post
What he’s getting at regards triggering a lower timeframe inside bar (or any other price action trigger come to that) is the fact you might obtain keener value or lower potential risk if you use the “much observed, obvious” reaction levels such as s/r, buy-sell pressure & big figure zones etc to execute your orders, rather than get caught in mid-stream where most of the herd tend to conduct their business.
Hi Anna,
Thanks for the reply. Allow me to summarize what (I think) you and Hawkmoon are saying. In a nutshell, look for inside bars (IB's) in a slower timeframe (T/F) - e.g. weekly bars - that appear near key S/R zones and then look to enter in a faster T/F - e.g. on a daily bar - when price pulls back to a significant zone in that T/F . Typically, I look at previous swing highs / lows, the previous day's high / low and round numbers. The specific trigger to enter the trade in the faster (1 day)T/F isn't especially important. However, what is important is that the IB has formed and been breached in the slower (1 week) T/F in the vicinity of a key area of S/R. As I day trade U.S. equities, I could reasonably substitute the weekly / daily T/F for 10 min's / 1 min' T/F respectively - or whatever. Am I along the right lines?
Thanks for your patience!

Tim.
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Old Nov 9, 2008, 6:35pm   #37
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I don't want to make it any more complicated than it needs to be.

As per his original example Tim, the way we play that specific set up (inside/outside bar) is via the Weekly or Daily timeframe. It serves a particular purpose & is geared more toward a (trend) positional, or certainly longer-range, swing type move.

Experience tells us that attempting to trade the set-up via the lower timeframes throws up too many unacceptable risk to cost issues, for us anyway. How others leg in & out is obviously down to them.

They’re an ideal lever into compounding a move and/or averaging into a value position, especially as price triggers a continuation leg of a larger trend run, as is the case currently on EURUSD.

All he was referring to with that last hourly chart reference, highlighting the premium A grade & lower B grade signals, was that if someone was holding a gun to his head & he had to leg in via the 60min, the value ticket (risk/cost) would be to engage on or near a recognized s/r zone, executing in line with the dominant order flow….in this case, shorting the EURUSD.

There’s actually an inside week on Euro kicking events off tonight which offers another potential continuation leg in thru 1.2525.

There was one which printed 3 weeks back thru 1.3345.
They’re not so common on these larger sheets, but depending how you play them, can be very profitable in extreme (strained psychology) environments.

As with any potential trigger, regardless of the set-up, the background & relevant research info you undertake, including risk parameters etc, has to stack up in order to justify the deal.
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Old Nov 9, 2008, 10:55pm   #38
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Hi Anna,
Thanks for the reply.
In a nutshell, look for inside bars (IB's) in a slower timeframe e.g. weekly bars - that appear near key S/R zones and then look to enter in a faster T/F - e.g. on a daily bar - when price pulls back to a significant zone in that T/F .

As I day trade U.S. equities, I could reasonably substitute the weekly / daily T/F for 10 min's / 1 min' T/F respectively - or whatever. Am I along the right lines?
I guess it comes down to how you blend price from the various timeframe references to sit alongside your intended aims for the trade you're considering undertaking.
Your risk to cost ratio will obviously rank right up there as a major priority & if you can average your criteria into a value ticket, you're good to go.

If the Daily or Weekly trigger is outside your risk boundary, even allowing for reduced size, then I guess dropping down into a 4 hour frame might get you aboard with a little compromize on the numbers.

As mentioned previously, I personally wouldn't consider executing this type of game plan on anything lower than a Daily frame, but thats just my appetite!

It's up to you to figure out whether or not you can make it work according to your preferred timeframe tolerances, but this run thru here is the type of trigger blending I'd look at if I was seeking a compromize or reduced scaleback of the weekly-daily play....

a little wider view of where these larger s/r zones hail from on this weekly frame....

Click the image to open in full size.

closer look at the weekly IB vicinity in relation to the near-term s/r zone (1.3670) & the next lower level guide @ 1.2980. The low of the IB is marked up in grey @ 1.3345.

Click the image to open in full size.

so, we got the low of the weekly IB ticked & the near term, next line potential reaction zones tagged. Drilling down into the 4 hour sheet you can monitor the activity as it plays out on & around the weekly activity zones to gauge the flows, behavior & potential to continue the downside momentum.
Using the weekly IB as the template, you could key into a low(er) risk event by seeking out mirror behavior (inside bar) via the 4 hour frame at & around the weekly s/r reaction level.

As long as you can compute acceptable risk, reasonable next level destination & momentum potential, based on price behavior - you're good to go.

Click the image to open in full size.

how you manage your ongoing risk, additional (compounding) size, whether or not you peel off profit on the way, etc etc will be directly influenced by your initial aims & expectations for the trade.

I guess a similar template could be operated on the timeframes of your choice, as long as the reasonings for triggering your decision hold water from the priority timeframe that you work your research from, all the way down to your trigger frame.

Click the image to open in full size.
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Old Nov 10, 2008, 9:04am   #39
 
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foredog started this thread 6am open 15792 above his long, below short

Potential setup for 8am

6am bar 15671 15804

7am bar 15682 15735

Sell stop at 15678

Stoploss at 15739

4.8 lots (9679.15/3 = 293.07 / 61 = 4.804)


Market rallied up, no trade order cancelled at 9am
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Old Nov 10, 2008, 10:04am   #40
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Anna,
Thank you for your comprehensive explanation with excellently annotated charts.

Tim.
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