Simple Inside Bar Pattern Strategy

Simple Inside Bar Pattern Strategy

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A simple forex trading strategy to trade daily time frame. It can be used on any currency pair and requires only 5-10 minutes of your time to check for valid trading setups.

What is an inside candlestick bar? It’s a candlestick that completely forms within the previous candlestick daily high -daily low trading range.

Inside Candlestick Bar Example:

Simple Inside Bar Pattern Strategy

Trading Strategy Rules & Example

  • Spot any inside candlestick bar on the daily time frame.
  • Place an order to buy 3 pips above the previous candlestick.
  • Place and order to sell 3 pips below the previous candlestick.
  • For buy orders: place stop loss 1 pip below the inside bar’s daily low.
  • For sell orders: place stop loss 1 pip above the inside bar’s daily high.
  • Use risk-to-reward 1:1.5 or better (risking 100 pips to make 150 pips).
  • Recommended: Set stop loss to break even at 100 pips profit.
  • Close the trade at your profit target level or if a valid inside bar trade appears in the opposite direction of the original trade.

Simple Inside Bar Pattern Strategy

Setup 1: We bought the EUR/USD at 1.3216 with our stop loss placed 1 pip below the inside bar’s daily low at 1.3084 (short order immediately cancelled).

Total risk: 1.3216 – 1.3084 = 132 pips

Our target level: 132 pips x 1.5 = 198 pips at 1.3414. This setup never reached our target but we moved the stop loss to break even (+100 pips trading rule). This trade was closed for 0 pips.

Setup 2: We sold the EUR/USD at 1.3158 with our stop loss placed 1 pip above the inside bar’s daily high at 1.3278 (long order immediately cancelled).

Total risk: 1.3278 – 1.3158 = 120 pips.

Our target level: 120 pips x 1.5 = 180 pips at 1.2978. This trade was closed for 180 pips.