Inside Bar Trading Technique -Good Results-

[Kurrency]

I apologize in advance if this has been covered and discussed here but I wanted to post this because I find it to be a good strategy. I first remember watching a video about it and then tried it out.
No automated strategy here (not from me anyways) so move along if you love downloads
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An inside bar is a bar when at it's close has a high that is less than previous bar's high and a low that is greater than the previous bar's low.

The market has to go somewhere after the formation of a inside bar. It is either going to go higher, lower or bounce within the range of the inside bars.

I am attaching a screenshot so I can better explain things.

Entry:When price breaks above (BUY) or below (SELL) the Inside Bars.

Exit: I am bad at exits so I say don't be greedy and find your own way.

Stop Loss: Stop loss should be at or below the low of the lowest of the 2 bars (that create the inside bar technique). But as you will see on my chart; to the right of it... if you had a hard stop loss set in you would be stopped out before the Eur/Usd climbed higher.
** the right side setup didn't have an entry point until it broke UP from the lines drawn.** this was just intended for a demonstration of what happens to hard stop losses.

The longer the 2 bars are the better the trade might be (see the middle part where we have a few small bodied inside bar setups)

I hope you liked this and let me know if you have any questions.

-K

 

[A Dashing Blade]

Never ever seen anything wrong in using this concept as a basic trading startagy.

 

[foredog]

Two links in my signature that may help as well

My (short) blog on Cable IB's and the other has links to Post by Peter Crowns on another forum (FF) where he trades solely 1HR IB's

May help (may not!)

 

[Splitlink]

It has many failures, though. I've been trying it for weeks. It is correct, provided that you have the direction right but then, so is almost everything else.

For those wanting to give it a try I would suggest that the trigger bar should have completed before entering the trade because there are many false, or sucker, trades in which the bar reverses and goes out the other side. I was advised that, when that happened, the trade was almost certain to reverse and so should be reversed when it enters the IB bar area, without waiting for it to go all the way through. That did not work often enough for me, either. Quite often there occurs another IB.

Hope that I haven't put you off, you may do better on another instrument or TF.

 

[foredog]

For those wanting to give it a try I would suggest that the trigger bar should have completed before entering the trade because there are many false, or sucker, trades in which the bar reverses and goes out the other side.

These days if it breaks out then pulls back to my entry or below i tend to just get out. Sometimes you miss a good one as it pings back into profit, sometimes you don't. I'd rather be out and wait for another than sitting there getting twitchy as it goes all the way back to my stop.

That's just me though, probably a scalper at heart!

 

[trendie]

It has many failures, though. I've been trying it for weeks. It is correct, provided that you have the direction right but then, so is almost everything else.

For those wanting to give it a try I would suggest that the trigger bar should have completed before entering the trade because there are many false, or sucker, trades in which the bar reverses and goes out the other side. I was advised that, when that happened, the trade was almost certain to reverse and so should be reversed when it enters the IB bar area, without waiting for it to go all the way through. That did not work often enough for me, either. Quite often there occurs another IB.

Hope that I haven't put you off, you may do better on another instrument or TF.

Cant remember where, but I read that IBs were at their most effective at price extremes. (sorry for introducing indicators, but boll-bands)

The idea is that price has extended, runs out of steam, congests, forming the IB, and then springs back to the median.
IBs within normal price ranges can be almost random, as per Splitlink, but at extremes, more reliable.
Will try to find out where I read that, but dont hold your breath.

hope that helps. (I dont trade them)

 

[timsk]

Hi Kurrency and welcome to T2W.
There is indeed quite a lot posted about inside bars here and elsewhere. If anyone is looking at them afresh and, particularly if they are new to trading, I would advise starting with 'failed' breakouts within the context of established trends. In this context they are a continuation pattern as opposed to a reversal pattern. They carry less risk and are much easier to trade than attempting to pick reversals. I've annotated your chart with an example.
Tim.
P.S. If you missed the entry that I've shown here, you could have had a second chance to get in just 4 bars later, where exactly the same set up presented itself. There's another example - exactly the same, earlier in the day just before 11.00.

 

[Splitlink]

This has just happened. IB was followed by uncertainty, as far as I am concerned. The last bar had not completed. This is a 5M Footsie.

 

[Scanjet]

The best way of trading inside bars is to identify them on a higher time frame then trade them on a lower one. For example, 4hr and 15min is a good combination. Draw a horizontal line at the breakout points on your 15m chart and trade a trend away from the line using trend following indicators and the mark1 eyeball.
Price action rules IMHO. Much better than buying the wonderful $7k black boxes so beloved by many on these boards.

 

[timsk]

Hi Split,
If - as seems to be the case - you're struggling with inside bars and when (or not) to trade them, I suggest a longer TF. Try 10, 15 or 30 minutes. There are numerous inside bars on your 5 minute chart (including one after the one you've highlighted) and, assigning deep significance to each and every one will drive you batty and probably lose you money if you try and trade them all. It's essential, IMO, to have some way of distinguishing between those that are significant from those that are not. A slower TF, basic trend analysis and S/R will help greatly in separating the men from the boys.
Tim.

 

[Splitlink]

I'll try Scanjet's way, see how it goes. I have a problem with faraway stops. I have survived by exiting quickly.
This is my problem with long bars in higher TFs and the reason that I don't like the hourly ones. TD's hourly pinbars are the same. Scan jet suggests 15M as a trigger, which I may like better. I'll let you know how it goes and Good Luck to those who are researching this.

Thanks for the feedback.

Split

 

[Scanjet]

One thing, your trend hunt is only valid for the duration of the next 4hr bar assuming you're using 4hr/15m.

 

[Kurrency]

I love discussions .
Splitlink, Thanks for blowing up my screenshot to show more that I missed. The 5 inside bars I have put a rectangle around are the trades I did on that chart.

After I posted this I made another trade and got out for 18 pip loss.
I also trade equity this way that is why I thought it might be nice to have a thread started and discuss different ways to use it (Like Scanjet's way)

Am new to the forum but not to trading nice to see so many helpful replies.

 

[Splitlink]

One thing, your trend hunt is only valid for the duration of the next 4hr bar assuming you're using 4hr/15m.

Right, thanks. I can only trade mornings so I am starting with 2 hours. The first one was 0600 on May 12. At 0800, look what happened.

 

[timsk]

If you're a fan of IB's and you trade the FTSE, then these are exciting times! The probability of a breach of Monday's low (the big red bu88er) is better than 98%, IMO. However, the possibility that price will find support at 4,300 is almost as great. Buying pressure could then see tomorrow's close back 'inside' the extremes of the big red bu88er. If that happens, yet another test of 4,500 is on the cards. On the other hand . . . if price just blasts right through support, then we could look for a test of same to see if it then becomes resistance. If this happens - and it holds - then this is extremely bearish action and price could waterfall all the way back down to the March lows.
Tim.

 

[neil]

Scanjet

The best way of trading inside bars is to identify them on a higher time frame then trade them on a lower one. For example, 4hr and 15min is a good combination. Draw a horizontal line at the breakout points on your 15m chart and trade a trend away from the line using trend following indicators and the mark1 eyeball.
Price action rules IMHO. Much better than buying the wonderful $7k black boxes so beloved by many on these boards.

Scan - could you illustrate via a chart please?

 

[timsk]

Hi neil,
Check out the posts by 'Hawkmoon' and 'ampro' in foredog's thread on IB's - they go into using a multiple time frame approach:
http://www.trade2win.com/boards/trading-journals/43898-simple-inside-bars-4.html
Tim.

 

[tenbobtrader]

Hikkake set up or something !

It has many failures, though. I've been trying it for weeks. It is correct, provided that you have the direction right but then, so is almost everything else.

For those wanting to give it a try I would suggest that the trigger bar should have completed before entering the trade because there are many false, or sucker, trades in which the bar reverses and goes out the other side. I was advised that, when that happened, the trade was almost certain to reverse and so should be reversed when it enters the IB bar area, without waiting for it to go all the way through. That did not work often enough for me, either. Quite often there occurs another IB.

Hope that I haven't put you off, you may do better on another instrument or TF.

good post Split,

just followed tims link here

drop and go

 

[Kurrency]

ah so it has been discussed here. just in a trading journal which I failed to check. very nice!

 

[Splitlink]

good post Split,

just followed tims link here

drop and go

Thanks for the link. I found it very useful. I'm working on lower TFs, now, because I am, by nature, an impatient soul and need a morning trading idea that I can close, hopefully at a profit, by 1300. Hourly TFs do not give me enough bars to analise for that period and my preference is TF15.

I know what you guys will say but those are the cards I must play with, unless I trade overnight, which I don't like, either.

Split