The Best Trading Setup Using Mother Bar-Inside Bar Combo (2024)

FAQs

The Best Trading Setup Using Mother Bar-Inside Bar Combo? ›

For a sell setup, first, you need to spot a solid big bearish bar, and then more than one small inside bar. When you find these setups, then wait for the next candle. If The next candle is also a big bearish candle that breaks the first mother bar's low, then place a sell trade.

Inside bar trading offers ideal stop-loss positions and helps identify strong breakout levels. You can create a successful risk management strategy and place successful trading orders with it.

If you are a scalper, you can use the inside bar in a 15-minute timeframe or lower. Using this forex trading strategy, you look for the inside bar in an uptrend or downtrend, wait for the pattern to fully appear, and double-check the price action through an indicator or support/resistance levels.

The classic entry for an inside bar signal is to place a buy stop or sell stop at the high or low of the mother bar, and then when price breakouts above or below the mother bar, your entry order is filled.

A pin bar is a price action strategy that shows rejection of price and indicates a potential reversal is imminent. An inside bar is a price action strategy that shows consolidation and that a potential breakout is imminent.

This pair caught 23 valid inside bar signals for the period, winning 19 positions or 79.17% of it all. That's even better than its previous 79.17% win rate in Q3, but did it catch bigger wins? Well, not exactly. The pair was able to rack up 238 pips or a 20.54% gain, just shy of the earlier 257-pip or 23.94% win in Q3.

Because there are simply too many inside bars on smaller time frames, many of which are worthless and result in false breaks, inside bars perform best on the daily chart time frame.

There's no doubt that inside bars can be a profitable way to trade the Forex market, equity, commodity or any other market. After all, it's a setup that it teaches as part of the price action course and one that has served extremely well. However, it isn't a setup that occurs often, at least not in a favorable context.

A common approach to trading the Double Inside Bar breakout uses stop orders. Precisely, place stop orders around the parent bar. The high of the parent candlestick is the buy stop order level. Correspondingly, the low of the parent bar is the sell stop order level.

Refining NR7 Strategy with Inside Bar Theory:

The inside bar strategy is a price action strategy and is also based on the same theory of expansion and contraction but here the expansion and contractions are defined based on different rules. So, the probability of winning automatically improves.

What is inside bar pattern? ›

The inside bar is a popular reversal/continuation candle formation that only requires two candles to present itself. This pattern is a direct play on short-term market sentiment looking to enter before the 'big moves' that may take place in the market.

First, unlike other candlestick patterns, inside bars are usually not distinguished as bullish and bearish by their look or color of the body itself, but rather by the location they are at and other peripheral developments.

1. Momentum Trading. At the heart of momentum trading is the practice of following trends. Those employing this method aim to profit from the movement of a stock or other financial instrument by purchasing during an uptrend and offloading it when there's a downtrend.

The Fakey Pattern (Inside Bar False Break Out)

When price initially breaks out from the inside bar pattern but then quickly reverses, creating a false-break, and closes back within the range of the mother bar or inside bar, we have a fakey pattern. So, think of it like this: Inside Bar + False-Breakout = Fakey pattern.

A 3 bar reversal pattern shows a turning point in the market. Compared to other reversal patterns out there, the three bars are one of the safer ones. Because it extends over three bars, using the third bar to confirm that the market has changed direction, it's a safe pattern to trade.

For a bullish pin bar setup we would place the stop loss just below the pin bar tail. The distance at which you place the stop loss depends on your comfort level as well as the currency pair being traded, but a good rule of thumb is 10-20 pips from the end of the pin bar tail.

There's no doubt that inside bars can be a profitable way to trade the Forex market, equity, commodity or any other market. After all, it's a setup that it teaches as part of the price action course and one that has served extremely well. However, it isn't a setup that occurs often, at least not in a favorable context.

At swing lows and key support levels for example, they are usually characterized with bullish attributes, and at swing highs and key resistance they may possibly represent bearish traits. Alternatively, inside bars can also point to periods of consolidation, and indecision prior to a pending breakout.

Is an inside bar bullish or bearish? It does not inherently indicate a bullish or bearish bias. It simply represents a period of consolidation or indecision in the market. So, the formation occurring within an uptrend can be bullish and signal a trend continuation or bearish and signal a trend reversal.

An Inside Bar develops during a strong downtrend when the trading range is completely within the high and low of the previous bar. This suggests the pressure between buyers and sellers is becoming more evenly balanced. Bears might be weakening in power while bulls might be increasing in power.