What is the Inside Bar Pattern? – Trading Strategy

The Inside-Bar strategy is a popular trading system with a relatively good profit/loss ratio, but unfortunately good conditions for taking a position are rare with this strategy. The Inside-Bar Strategy does not require any indicators and can be used in the Bar- or Candlestick Chart.

Advantages of this strategy

✔ the entry points are clearly defined

✔ simple trading system

✔ good profit/loss ratio

Disadvantages of this strategy

✖ rather rare occurrence of the right conditions

Application of the strategy

  1. An “Inside-Bar” is a chart bar, or candlestick, that fits completely into the previous chart bar, including the high or low points. Both chart bars together are also called “container”.
  2. If we refer to the current price bar as bar [1] and the previous bar as bar [2], the following conditions must be met for it to be an inside bar:High [1] < High [2] and Low [1] > Low [2]
  3. a bearish inside bar following a bullish chart bar in a visible uptrend signals a short position.
  4. a bullish inside-bar, which follows a bearish chart bar in a visible downward trend, signals a long position.
  5. the stop loss is set at the high of the container for short positions. For long positions, the stop loss is placed on the low of the container.
  6. the take-profit should be placed on the next resistance or support area.

Example:

In the example above, you can see a bullish chart bar after a downward trend. The Inside-Bar is easy to see here and the Stop-Loss is at the low of the container. the target is at the next expected resistance level. In the example above, the trade would have reached the take profit without any problems.

Warning:

The use of Forex strategies is at your own risk. Broker-Bewertungen.de makes them available to its visitors free of charge and is not responsible for any losses incurred through the use of the Forex strategies. Please test all strategies thoroughly on demo accounts before using them on a real money account.

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