Hello and welcome to another edition of the bulls vs the bears. Last time I showed you A Complete Breakdown of the Inside Bar and How to Trade it. Today we are going to learn about three perfect tips you can use to profit from trading inside bars. I’m sure you guys really enjoyed the breakdown on inside bars last time. Trading Inside Bars can be fun if you know understand how they function of course. Unfortunately too many traders do not under understand how inside bars work ,and consequently they end up bleeding money to the point where they pull out their hair in frustration. It doesn’t have to always be that way when you are trading the inside bar.
Let me let you in on a little secret. There is a very subtle side to to the inside bar. Knowing these subtle differences could be the difference between forex prosperity and forex poverty. I’m not saying that every inside bar trade is a guaranteed winner. But once you figure the nuances of trading the inside bar you put yourself in great posiion to make humongous profits. I’m not saying every trade is a sure bet. So long as you put yourself in the best position to make profits
So without further ado, let’s jump into the three perfect tips you can use to trade the Inside Bar.
First up is
Trade Inside Bars On Daily Chart Frame ONLY
When I first started trading I heard so much about the daily time frame. I was like “What’s the fuss about the Daily time frame? The one hour and four hour time frames is where it’s at.” Unfortunately for me I was losing so much money on the 1 hour and 4 hour time time frames it was ridiculous. So I said to myself” Let me try the daily time frame and see how it goes.” I’ve never looked back since. The daily chart frame is the only chart frame I trade on these days,
You see the daily chart frame is the strongest time frame you of all the time frames for inside bars. Let me show you a few reasons why I say so.
1.An inside bar on the daily time frame alerts you of possible time frames and that you need to be ready for a potential break out. An inside bar takes up more significance on a daily chart frame than on a lower frame, It cuts out all the sideways and choppy movements that you get on the 4 hour and 1 hour time frames. Rather you have one inside bar pattern or inside day pattern.
2. There are two many faulty inside bars on the lower time frames. Consequently they trigger false breaks you do not want to jump, especially if you are a rookie trader. Even worse they are of no value to you as a trader, which will cost you barrels of cash, not to mention peace of mind.
In alerting you of possible consolidation on the lower frames, the daily time frame saves you valuable cash and utter misery.
Avoid Multiple Inside Bars on Lower Time Frames
You have a huge cluster of inside bars on the lower time frames. Consequently you endp falling victim to the dreaded false break. This makes it doubly hard to trade inside bars on time frames because they are insignificant and they costing you valuable profits and time. You’d be better off spending all that time focusing on the daily time frame. Now let’s look at an illustrations of differences in trading inside bars on the 1 hour and daily chart frames
This is what the the 1 hr time frame looks like. Now who will want trade such a choppy mess? For starters it’s tough making any meaningful analysis of this mess. Not to mention the fact that you have so many failed inside bars staring you in the face. There is no way you can trade all of them. Come to think of it, trade them and see whether your trading account will not blow up in your face. Now let’s take a look at a daily chart
As you can see the price action on the daily is clean. You don’t have to scratch your head making trading decisions over choppy price action. You should be able to make your decisions and reign in your profits with ease with such a smooth pattern staring you in the face.
Last but not least is
Trade Inside Bars Bars With Daily Chart Trend
Not only should you trade inside bars on the daily chart. But you should trade daily inside bars with the daily chart trend. It’s the right thing to do. However, if you are harboring any crazy intentions of trading against the trend. DON’T EVEN TRY! You will blow a huge hole in your trading account if you do. I’m not saying it can’t be done. But unless you’ve ve been trading for ten years or more, You’d be better of trading inside bars with the daily chart trend. You should ONLY trade against the trend using key chart levels.
Inside bars are best traded as continuation patterns on the daily chart. Think of inside bars as breakout moves which provide great risk reward potential for getting on board trend markets after a brief period of consolidation. Let’s take a look at inside bars in daily trend using USDJPY.
Ladies and gentlemen here is a layout of inside bars in a daily trend. Take a close look at inside bars in bow\bearish and bullish trends. Inside bars work great in trending markets because they are continuation patterns. You don’t need to stress out analysing these patterns. The data is screaming “TRADE ME” at you. And when it does yell at you, you only need to oblige.
And last but not least:
Don’t Strangle Your Trade With a Tight Stop Loss
There is this this school of thought going around sayingyou place your stop loss just below or above the mother bar, high or low of an inside bar.”Well I’ve got some bad news for you. It doesn’t always work that way. Sometimes you ran the risk of strangling your trade with such a tight stop loss. You place your stop losses in places where they stand the best chance of not being whacked by sharp fluctuations in price.
I can hear somebody asking”Well, where is the best place to place a stop loss?” Well make sure your stop loss is further away from any key levels. This might mean you reducing your position size to accommodate a wider stop loss distance. Let’s take a look at an illustration using the EURUSD.
As you can see the theme of continuation is written all over this chart be it downtrend or uptrend. The breakout plays create risk reward opportunities if you play your cards right. Once the trend resumes after a brief pause your trade will be riding like a socket and racking up profits as well.
That’s s wrap for “Three Perfect Tips You Can Use To Profit From Trading Inside Bars”
Til next time take care.
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