Inside Bar Strategy and GBPUSD

Here i will point out how you could have easily made 120 pips over the past 2 days using a simple strategy. In technical parlance, it is called an inside bar. Take any chart of any pair, take any timeframe. If the high and low of any bar is within the high and low of the previous bar, then it is called as an inside bar. These occur on all timeframes.

A simple trading strategy is to trade the breakout of the inside bar with the stop loss at the other end of the bar and the take profit as the length equal to the inside bar. Attached is the daily chart for GBPUSD which shows this. I have marked the inside bar with an ‘A’. So, the idea is to watch for the breakout of this bar the next day (you can even put pending orders on both sides of the bar). If it breaks upwards, take a long and vice versa.

So, yesterday, you had a breakout on the long side, your order would have been triggered. The SL would be the low of the inside bar. You could have made a cool 120 pips by now. Better idea would be to exit half of your lot size when your TP is hit and move the SL for the rest to break even and let it run. You would make more.

Then go through the chart attached and you can see several such inside bars being broken on the long and short side as well. Such bars are quite rare on daily charts (you might get one such bar in a month per pair) but they can also be seen on 4H, hourly and 15 M charts. Of course, their success rate would become lesser as you go down in the timeframes !!

I do run a signal service with has a very highly unique offer which creates a win-win situation for all. If you are interested, please contact me through twitter or email ([email protected]). I have a private twitter account to capture all my trade calls.

Do follow me on twitter (http://twitter.com/ns_karthik) where i post some of my trades in real time.

  Copyright secured by Digiprove © 2010

The following two tabs change content below.
Winners Edge Trading was founded in 2009 and is working to create the most current and useful Forex information and training available on the internet.

Winner’s Edge Trading, as seen on:

Winner's Edge Trading in the news

  • well, indeed, it works best if it is in the direction of the trend….but, personally, i wouldnt mind that…as long as my money management is good, it does not matter…i wouldnt want to complicate things by throwing in indicators etc. to find the trend and all that…

  • hi, not sure which bar u r pointing out but if there is no breakout, u dont take a trade….u dont lose anything by not taking a trade…do u?

  • Kemshalom

    Great tip. But looking at 4 Bars back fromm the one you marked A under, the Hgh and the Low is within the High and the Low of the 5th candle but no breakout the following day. What can you say about that?

  • Roger

    You should mention that one should trade this strategy with the trend. It works best on GBP/USD and EUR/USD 15 min. charts.