Inside Outside Vertical Bars with Daily Pivots

asimpleplan

Member
62 3
I recently saw this Todd Mitchell video, which seemed really clear to me. I'd be really interested to hear your thoughts.


This is the strategy:

- Trades based on a pair of Inside/Outside vertical bars using pivot points as directional indicators.
- When there are two vertical bars, whether inside or outside engulfing, when the market takes out the high/low of the second vertical bar, it signals a strong trade either bullish/bearish.
- can be applied to any market, any time!!

Of course it all sounds perfect on the day in question and I don't agree with his trade at 3.30ff but I guess that's what Stop Losses are for and 3/4 successful trades of is pretty good isn't it??
 

asimpleplan

Member
62 3
I'd be interested in hearing some sort of response to this. As a newbie it's hard to know if one is on the right track given the deluge of data on technical analysis. Like I said, his logic seems sound but it's hard to know. Also, if Todd Mitchell's systems work so well, then why he's expending all his energy selling trading education?
 

timsk

Legendary member
6,889 1,784
. . .Also, if Todd Mitchell's systems work so well, then why he's expending all his energy selling trading education?
Hi asimpleplan,
That's a very good question - the answer to which you'll have to decide for yourself. If you're thinking of buying any of his products or services, I recommend that you check out this FAQ first: Can You Recommend a Mentor, Coach or Trading Course?

Regarding inside and outside candles - there's nothing wrong with them exactly and Todd Mitchell explains them well enough in the video. However, making money with them consistently is another matter entirely. They are quite bewitching and, certainly, I was transfixed by them for a very long time. However, I never managed to trade them profitably. Don't let that put you off though - as it's just my experience - yours may well be very different.

Personally, (again, this is just me), I'm not a fan or either bars or candlesticks and trying 'read' meaning into the various patterns they create. That's a cul-de-sac that I spent many years going down. The problem with them IMO is that intraday they are apt to confuse more than they are to enlighten. There's a long standing and well respected member who (after many years away) has just started this new thread: If You Can Draw A Straight Line (You Can Become A Successful Trader). In it, he's posted a free pdf to download in which he has this to say about the topic in hand . . .

In order to trade price effectively, one must first accept the continuous nature of the market, the continuity of price, the continuity of transactions, the continuity of the trading activity that results in those transactions. The market exists independently of you and of whatever you're using to impose a conceptual structure. It exists independently of your charts and your indicators and your bars. It couldn't care less if you use candles or bars or plot this or that line or select a 5m bar interval or 8 or 23 or weekly or monthly or even use charts at all. And while you may attach great importance to where and how a particular bar – or candle – closes, there is in fact no "close" during the market day, not until everybody turns out the lights and goes home, which doesn't happen until the end of the week with the NQ, ES, et al."

Therefore, trading by price, or at least doing it well, requires getting past all that and perceiving price movement and the balance between buying pressure and selling pressure independently of the medium used to illustrate or reveal the activity.

Once the continuous nature of these movements is understood, the idea of wondering – much less worrying – about what a particular bar – or candle – "means" is clearly ludicrous (including where it "opens" and "closes" and what it's high is and so forth), and eventually the trader may come to the realization that all those people who've been insisting that these bars have some cosmic meaning have been trying to sell him something, i.e., DVDs and courses and software and seminars (box lunch included) and so forth that explain what these meanings allegedly are.

If the continuous nature of these movements is not understood, then the trader spends and wastes a great deal of time over "okay so this bar is higher than that bar but lower than this other bar, and price is going up (or down or nowhere), so . . .". Price is a movie, not a slideshow


Just so you're clear, although I personally subscribe to the view expressed by dbphoenix in the pdf - that doesn't mean that it's right (as in universally correct and applicable to all traders) - or that it's the only way to view price and to trade - or that trading candlestick patterns (such as inside/outside candles) is wrong. Each to their own and you have to determine for yourself what is right or wrong for you - based on your understanding and beliefs about the way the markets function.

If you decide to pursue inside/outside candles, there's mountains of info' available for you to immerse yourself in; this being as good a place to start as any: Simple Inside Bars Let us know your findings and how you get on - and feel free to ask any questions.
Tim.
 
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0007

Senior member
2,159 519
Timsk - that really is a very helpful and well thought out answer. It's in the best traditions of what this site should be all about ..... And I know you're on the staff and all that, and it's your job ..... But there's nothing like someone's recall from personal experience. I would advise all beginners to take heed – I picked up many useful tips from here over the years.