You can use it to find new trades and you can also use it to manage your trades. You can also use it as a trailing stop loss strategy.

The two simplest and most common strategies to trade the inside bar are the inside bar breakout and the inside bar reversal strategy. The first key to trade the inside bar as a breakout strategy is identifying a strong trend either higher or lower. In the example below, price is in a strong trend lower. Because there is a strong trend, the inside bar represents a pause in the price action where some profit is being taken and price is taking a breather. When looking to enter with the inside bar breakout you are looking to enter when the signal confirms itself.

This happens when price breaks the inside bar high or low in the direction of the trend. In the example below we are looking to take a short entry when the signal confirms itself and breaks lower with the trend. To use the inside bar as a reversal you need to see it formed at swing highs or lows and at key price action levels.

These levels are often major support or resistance levels. In the example below price moves lower into a swing low and forms an inside bar. If this inside bar was formed at support, then it could be an indication that price is looking to make a reversal back higher and we could look to get long when price breaks back above the inside bar high.

Whilst you will find the inside bar on all of your different time frames, the higher the time frame the more weight the pattern holds. Because this is an indecision candlestick pattern it is absolutely crucial where and how it forms.

What does it tell the forex traders! It tells the traders that the market is looking for direction. Big institutions and big traders are deciding either to upward or downward.

Remember that whenever the market is moving like a broadening pattern or inward pattern then it is always looking for direction. This inside bar strategy is based on the fact that price decides its direction from key levels. But if there is an inside bar at the key level then it will make it easy to forecast the direction of the market. For example, the market will tend to reverse or continue its direction from a resistance level.

When the market price reached a resistance level, there it will decide either to break this resistance level or to reverse from this level. When the inside bar forms at that resistance level, it is a clear indication that the market is deciding its future direction. Breakout of the inside bar pattern confirms the direction of the market.

If the price breaks high of the inside bar, then it will continue its trend it will go up. Price will reverse its trend if it breaks the low of the inside bar. This is a pure price action strategy, and it has a higher winning rate. Support and resistance zones represent strong key levels. when price breaks those key levels, it tends to move to the next key level. The Fibonacci tool is a powerful natural tool and I have used it to adjust take profit level.

Follow the following steps of inside bar trading strategy 1. The inside bar strategy 2 is composed of a trendline breakout and an inside bar breakout. A trendline is made up of at least three consecutive bounces of the price that make it a key level. it is also known as inclined support or resistance level. formation of inside bar pattern after the breakout of trendline works best and this breakout strategy gives profitable results.

The typical action is to go with 1 pip over or below the mother bar high or low. There is no necessity in trying and figuring out the best distance above, or vice versa below the preceding bar - the trade either performs well, or it doesn't.

A few pips will not create a great difference over the long run in these instances. Let's look at another important stop placement. It is regularly utilised on inside bars with bigger mother bars. That is, to say, a golden middle between the high and low of the mother bar. Did you know that Admirals offers an enhanced version of Metatrader that boosts trading capabilities?

Now you can trade with MetaTrader 4 and MetaTrader 5 with an advanced version of MetaTrader that offers excellent additional features such as the correlation matrix, which enables you to view and contrast various currency pairs in real-time, or the mini trader widget - which allows you to buy or sell via a small window while you continue with everything else you need to do. This is the only effective method for receiving a satisfactory risk-reward ratio on these kinds of inside bar Forex trading setups.

It is suggested by professional traders to use smaller and tighter inside bars, which do not have too big mother bars. This represents more compression, and therefore a powerful potential breakout from that compression.

Whether you are a newbie or a novice trader, it is advised to avoid inside bars with large mother bars for now. The most rational time to utilise an inside bar is when a powerful trend is in progress, or when the Forex market has plainly been moving in one certain direction, and then pauses for a short period. Inside bars can be applied when trading a concrete trend on 4 hour charts, or even daily charts, although trading inside bars Forex on daily charts is preferable, especially for novices.

If you are a newbie trader, do this until you have mastered and found steady success with the inside bar setup on that frame of time. You may also stick to inside bars, which are in-line with the daily chart trend as particular continuation signals, until you have completely mastered trading them that way.

You might also occasionally trade inside bars as reversal signals from main chart levels. The best time time to trade an inside bar Forex trading strategy is on a daily chart time frame.

The reason for this is because on time frames below the daily chart, inside bars grow too much to be worth trading. There can be long strings of inside bars on either a 4 hour or a 1 hour chart prior to a breakout for instance, and attempting to trade them can cause a lot of confusion, due to to all the amount of false breaks that may occur on those chart time frames.

Many traders waste their time trading inside bars on lower time frame charts. Once you have experience, you may be able to trade inside bars on a 4 hour chart frame of time, however, that is the lowest time frame it is suggested to trade an inside bar on. The daily chart is the best for inside bars, and additionally, even the weekly chart can, from time to time, yield some very profitable inside bar setups.

Furthermore, inside bars can be applied while trading a particular trend on either the minute charts, or the daily Forex charts. All newbies are recommended to stick to the daily charts until they have completely learnt and found constant success with the inside bar setup on that frame of time.

To get a detailed outline of using the Inside Bar trading setup in video format, have a look at our video below:. As you can see, the inside bar Forex strategy is a useful strategy for Forex traders. There are concrete methods available for using inside bars, and what you use will depend on your personality, what you want to achieve, and of course, your own proficiency level. As a beginner, stick to charts which do not require a more advanced understanding, and proceed only after gaining a true understanding of the system and the Forex market.

Click the banner below to open your live account today! About Admirals Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8, financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today! This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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Once you learn how to identify this pattern, then you will very quickly start seeing it everywhere. You will see it in many different markets and on all of your different time frames. However, just because the inside bar forms often and can be easily identified does not mean you should be using or trading it. In this post we go through exactly what the inside bar is and how you can use it successfully in your own trading. Note: You can get your free inside bar trading strategies PDF download below.

Free PDF Guide: Get Inside Bar Trading Strategies PDF Trading Guide. The inside bar pattern is a one candlestick pattern where price forms completely within the previous candlestick. For an inside bar to be considered valid both the high and the low of the candlestick or bar if using bar charts need to be completely inside the previous candle.

There is often confusion around the wicks or shadows of the candlesticks. To clear this up from the start, the inside bar takes into account the candlestick wicks. This means that the high and low, including the wicks of the candle must be within the high and low of the previous candlestick.

To simplify this even further; the inside bar must have a high that is lower than the previous candlesticks high and a low that is higher than the previous candlestick, including the wicks.

The inside bar is formed because price was not able to break either the high or the low of the previous session. This shows us that neither the bulls or the bears were in control during the session. This can be very important information when used correctly, however it is important you note where the inside bar forms and in what type of market.

If an inside bar forms in a strong trend, for example a trend higher , then it could be signalling a quick pause before price continues on with the trend. If an inside bar forms at a swing point and major support or resistance area, then it could be signalling that the steam has run out of the current move and a reversal is about to play out.

Because this is an indecision candlestick it is very important to pay attention to where and how this pattern forms. You will be able to find this pattern on all of your time frames from the one minute chart right through to the monthly chart. However, just because you can find the inside bar on all of your time frames does not make them all created equal.

Inside bars formed on higher time frames will hold more weight compared to inside bars formed on smaller time frames. If price action is showing indecision and cannot break the previous candlestick high or low on the one minute time frame, that shows us that for one minute price was stuck.

However, if we see that price could not break higher or lower on the daily time frame and forms an inside bar, then it shows that for a whole day neither the bulls or bears could gain control. There are many ways you can use the inside bar in your trading.

You can use it to find new trades and you can also use it to manage your trades. You can also use it as a trailing stop loss strategy. The two simplest and most common strategies to trade the inside bar are the inside bar breakout and the inside bar reversal strategy.

The first key to trade the inside bar as a breakout strategy is identifying a strong trend either higher or lower. In the example below, price is in a strong trend lower. Because there is a strong trend, the inside bar represents a pause in the price action where some profit is being taken and price is taking a breather.

When looking to enter with the inside bar breakout you are looking to enter when the signal confirms itself. This happens when price breaks the inside bar high or low in the direction of the trend. In the example below we are looking to take a short entry when the signal confirms itself and breaks lower with the trend.

To use the inside bar as a reversal you need to see it formed at swing highs or lows and at key price action levels. These levels are often major support or resistance levels. In the example below price moves lower into a swing low and forms an inside bar.

If this inside bar was formed at support, then it could be an indication that price is looking to make a reversal back higher and we could look to get long when price breaks back above the inside bar high. Whilst you will find the inside bar on all of your different time frames, the higher the time frame the more weight the pattern holds.

Because this is an indecision candlestick pattern it is absolutely crucial where and how it forms. You need to look at and follow the price action that is formed around the inside bar to successfully start using them. I hunt pips each day in the charts with price action technical analysis and indicators.

My goal is to get as many pips as possible and help you understand how to use indicators and price action together successfully in your own trading. Skip to content. The inside bar pattern is one of the most common candlesticks you will find on your charts. Table of Contents. Pip Hunter I hunt pips each day in the charts with price action technical analysis and indicators.

The inside bar strategy 2 is composed of a trendline breakout and an inside bar breakout. I hope this lesson has provided you with some helpful tips that you can implement in your trading plan. The price was moving in a downtrend and you can spot two consecutive candles. But sometimes, after the breakout, the price again closes inside the key level. If you have any previous knowledge of candlestick patterns, you will get a full grasp of inside bar Forex strategy in no time. Because there is a strong trend, the inside bar represents a pause in the price action where some profit is being taken and price is taking a breather.

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