Inside Bar Forex trading strategy — a popular system with a nice win/loss ratio but a rather rare occurrence of the proper entry conditions. It doesn't require any indicators and can be applied on the bare candlestick or bar chart.
Features
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Entry conditions are clearly defined.
Very simple bare chart system.
High success rate.
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Rare occurrence of the proper conditions.
How to Trade?
An inside bar is a bar or a candlestick that completely fits into the first preceding bar (also called a "container" bar), including its High and Low values.
If the current bar has an index of 0 and the previous bar has an index of 1 then the following conditions should be true for the current bar to count as an inside bar: High[0] < High[1] and Low[0] > Low[1]. Mind the strict "greater" and "less" operators.
Bearish inside bar that follows a bullish "container" bar on the clearly visible uptrend signals a Short position.
Bullish inside bar that follows a bearish "container" bar on the clearly visible downtrend signals a Long position.
Stop-loss is set to the Low of the "container" bar for the Long positions and to the High of the "container" bar for the Short positions.
Take-profit should be set to the nearest support/resistance level formed by the trend.
Example
Inside Bar Trading Strategy
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A bullish inside bar after a downtrend is shown on the example chart. The inside bar is easy to identify and the stop-loss level is rather conservative here. The target was set to the resistance level formed by the previous downtrend. As you can see, the currency pair rate reached the take-profit level without any problems.
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