Inside Bar Trading

Great question Donovan5. I would. But sometimes you have to look at your account and decide how much you can afford to risk. It certainly seems to be the way to go though.
donovan5 said:
Would you set a stop on the other side of the mother bar as well?
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Trading based on the mother bar would give fewer false signals and fake-outs, but has a stop-loss further away. If profit target based on mother bar range, this also likely to be hit less often. as so often in this game, I suppose it depends how you play it. My initial surveys of charts suggest that it is always profitable to take IBs as signals in both directions - though profit can be significant if break-out from IB is with prevailing trend - this might justify an asymmetrical response, such as order to go long with twice position size on an IB in an uptrend, but I would still place a smaller sell order below in case of a significant pullback or even a reversal.
 
PS - Long and short orders on Dow today as yesterday shows IB. This demonstrates the difficuluty in trend definition - trend for last 2 weeks is up, but since January is down. Orders placed are therefore symmetrical.
 
tomorton said:
I suppose it depends how you play it. My initial surveys of charts suggest that it is always profitable to take IBs as signals in both directions - though profit can be significant if break-out from IB is with prevailing trend
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Trading is about risk reward ratios, why risk 1 point to earn 1 point in a 50/50 situation, go for risk reward of 1 to 3+, only trends give high risk reward ratios of > 3
 
oildaytrader said:
Trading is about risk reward ratios, why risk 1 point to earn 1 point in a 50/50 situation, go for risk reward of 1 to 3+, only trends give high risk reward ratios of > 3
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We don't disagree on r:r ratio, but what I'm saying is that a percentage of what are 1:1 ratios on entry develop into 1:2 or 1:3 or better. As long as the ratio can only extend to the right, so that reward is permitted to rise, but risk is never extended, I am happy to be in on 1:1 trades.

Two of the key rules I see in mechanical trading on TA signals is that a) you have to take ALL the signals that fit your TA parameters, there is no way to know on entry which 20% or 30% or whatever become your major winners, and b) adding TA parameters will reduce the number of trades but will not significantly increase the proportion of major winners.
 
tomorton said:
We don't disagree on r:r ratio, but what I'm saying is that a percentage of what are 1:1 ratios on entry develop into 1:2 or 1:3 or better. As long as the ratio can only extend to the right, so that reward is permitted to rise, but risk is never extended, I am happy to be in on 1:1 trades.

Two of the key rules I see in mechanical trading on TA signals is that a) you have to take ALL the signals that fit your TA parameters, there is no way to know on entry which 20% or 30% or whatever become your major winners, and b) adding TA parameters will reduce the number of trades but will not significantly increase the proportion of major winners.
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Staying in 1 to 1 costs mental capital and energy.The energy mental capital are the more important than the gains on 1 to 1. Trading mediocre positions costs measurable sums of energy, but it costs immeasurable sums of mental capital.

Surely you could devote your energy to other highly trending instruments oil,gasoil,stocks etc

Here is one to enjoy for noobs

 
Hello chaps nice thread very straight forward. You may notice a lot that you'll have a mother bar and then perhaps 3 inside bars. Most candlestick patterns people suggest that this is usually a continuation of the trend. When you think about it logically it makes perfect sense. Take this scenario. Price moves down quickly with one large bar (mother bar) in a down trend. Now we have our 3 up bars all within the first bars range, this is taking 3 times longer to move up than it is to move down. That suckers going to run out of gas any second and collapse down. Even if we have the 4th up bar and it breaks above the mother bars top I'm still not betting on a reversal thanks. I go against the downtrend only when I see a hammer followed by an upward candle(that vid shows one perfectly by the way which he seems to ignore..the larger the shadow usually points at how far we could go up.
 
Fair point Mr Flibble. In fact IBs can contribute to a whole range of interesting patterns (another e.g. both mother bar and IB meet same high s/r - tweezers?) but the key is that they are helpful. Some TA commentators suggest they can be ignored as they're not that common and do not clearly show either price continuation or reversal. I find that they very often have something to say, even if its only to support a short-term trade.
 
tomorton said:
Fair point Mr Flibble. In fact IBs can contribute to a whole range of interesting patterns (another e.g. both mother bar and IB meet same high s/r - tweezers?) but the key is that they are helpful. Some TA commentators suggest they can be ignored as they're not that common and do not clearly show either price continuation or reversal. I find that they very often have something to say, even if its only to support a short-term trade.
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Trading reversals inside bars requires confirmation from bullish engulfing patterns, on higher time frames, otherwise it is like catching a falling knife.
 
oildaytrader said:
Trading reversals inside bars requires confirmation from bullish engulfing patterns, on higher time frames, otherwise it is like catching a falling knife.
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I respectfully disagree. They can be usefull on all time frames and not just confirmation but for breakouts.
My best trade yesterday was a short on GBPCHF at 1.66, a break of a daily and weekly inside bar. (It paid for yesterdays losers and some)
 
Funny I came across this post because straight afterwards I had a handful of trades that were just that inside bars. One of them was for BAY broke below the mother candle on a short term uptrend shorted it and stopped out soon after then we went above it in the very next candle so I went long and got my money back. Shooting star and I'm now shorting again this time way down to 205 ish or so I hope.

Another trade just a couple of hours back was the EUR/USD 8:35 candle GMT it broke below it after a short term uptrend which I took for giggles then got shorted but it broke up again and I made a nice few pips on the upside.

Can trading be this easy? Yes if you know what to look for. This post really is useful I suggest that the new traders read it carefully. Conclusion for today ... be wary of the break against the trend even on a 2 hour uptrend hold back and wait a candle but DON'T hold back from a break above the mother candle on an uptrend. Would love to see the probabilities for the above but I just feel they're good.
 
Mr Flibble said:
Funny I came across this post because straight afterwards I had a handful of trades that were just that inside bars. One of them was for BAY broke below the mother candle on a short term uptrend shorted it and stopped out soon after then we went above it in the very next candle so I went long and got my money back. Shooting star and I'm now shorting again this time way down to 205 ish or so I hope.

Another trade just a couple of hours back was the EUR/USD 8:35 candle GMT it broke below it after a short term uptrend which I took for giggles then got shorted but it broke up again and I made a nice few pips on the upside.

Can trading be this easy? Yes if you know what to look for. This post really is useful I suggest that the new traders read it carefully. Conclusion for today ... be wary of the break against the trend even on a 2 hour uptrend hold back and wait a candle but DON'T hold back from a break above the mother candle on an uptrend. Would love to see the probabilities for the above but I just feel they're good.
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incorrect you are gambling.

define trend.
 
oildaytrader said:
Troll territory?

See the chart speaks for itself .contrarian trades would have screwed up with wasps' stupidity
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a laughable attempt, your are clearly more stupid than i first thought or are deliberately trying to mislead people.

if you actually thought about the question a little you might learn something.
 
sharky1 said:
a laughable attempt, your are clearly more stupid than i first thought or are deliberately trying to mislead people.

if you actually thought about the question a little you might learn something.
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What's your previous nick ? Stinger?

5 posts ,knows it all and knows all the old cons and come to teach us?
 
elitejets said:
I respectfully disagree. They can be usefull on all time frames and not just confirmation but for breakouts.
My best trade yesterday was a short on GBPCHF at 1.66, a break of a daily and weekly inside bar. (It paid for yesterdays losers and some)
Click to expand...

Agreed they can be used on all time frames and for breakouts , if you go and back test 1,000 setups the results will show greater profitably with trends.

A quick look at GBP/Chf daily charts confirms the breakouts from inside bars worked better , when traded with the prevailing trend.The prevailing direction was down.

O D T
 
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