Indicatorless strategy Inside Bar, your opinion
The use of candlestick patterns, price action and a complete refusal to use indicator-based Forex strategies is considered to be the highest point of professionalism among novice traders.
Of course, abandoning the so-called crutches allows us to significantly overcome the situation regarding the delay of signals.
After all, the entire trading process centers around price patterns, and not secondary indicator tools, which in most cases are lagging.
However, in most cases, one entry point is far from sufficient, since sometimes it is not the point at which the trade was opened that is important, but how competently the trader can exit the position, whether he can get all the profit from the price movement or immediately complete the trade.
Thus, the effectiveness of price action is greatly exaggerated.
You will also be able to understand how to turn the weaknesses of non-indicator strategies into strengths using simple tools.
The indicator-free Inside Bar strategy is the simplest strategy based on Price Action using such a common pattern as the Inside Bar as a signal tool.
The strategy itself does not have any requirements regarding a currency pair or a specific asset, so it can be called multicurrency.
It is also worth understanding that the Inside Bar strategy can be used on all time frames, however, as the practice of using candlestick patterns and strategies based on them shows, maximum efficiency is achieved on higher time frames, such as H4 and D1.
Introduction to the Inside Bar pattern.
Strategy signals Stages of uncertainty, balance and parity of forces, which are often called a kind of truce between bulls and bears, are a frequent basis for building breakout strategies.
Exit from consolidation zones, breakouts of flats and ranges of trading sessions - all these strategies are built on the basis of a sharp change in the strength of participants who were in equilibrium shortly before.
The Inside Bar pattern refers to patterns of uncertainty and balance, which indicates a conditional balance of power between bulls and bears.
The pattern itself consists of two candles, namely the first large one in the direction of the price movement and the second small one behind it, which is located between the minimum and maximum of the first candle.
Such a combination indicates a certain balance of the parties, since the major movement was stopped, but the price is still within the candlestick.
It is worth understanding that the second candle should be much smaller than the first, because otherwise it is a false figure.
When trading using a strategy, you need to pay attention to support and resistance levels.
The fact is that any figure, and especially if we are talking about the Inside Bar, works effectively if it relies on a certain level of support, and both the first and second candles can be supported in the pattern.
If there is no reference level nearby, it is better to ignore the pattern. The strategy is implemented using pending buy stop and sell stop orders.
So, if a large bullish candle appears on an uptrend, and inside it there is a bearish one and does not go beyond the minimum and maximum of the previous candle, we place a pending buy stop order at the maximum of the bullish candle. If a large bearish candlestick appears in a downward trend, and behind it there is a small bullish candlestick that does not go beyond the minimum and maximum of the first candlestick, place a pending sell stop order at the minimum of the first candlestick.
The trader places a stop order either behind the opposite tail of the signal candle, or immediately behind the nearest level.
Example:
A stone in the garden without indicator strategies
Using the same strategy without an indicator can lead to completely different results.
The fact is that it is very difficult to talk about the accuracy of graphical analysis, price action and the Inside Bar strategy itself, since this type of analysis is directly related to the imagination and attentiveness of the trader.
Thus, the subjectivity of traders' views on the market is a key factor that can influence the profitability of the strategy.
The second open question for Inside Bar strategists is to determine the trend, because everyone can regard a certain wave both as a rollback from the trend and as the beginning of a new trend.
The only way to solve this problem is to remove the subjectivity of looking at the trend, and any trend technical indicator will help you with this!
In conclusion, it is worth noting that using the Inside Bar strategy without auxiliary filters can lead to very unpredictable consequences, since the effectiveness of the strategy largely depends on the subjective perception of the trader.
However, if you move away from your own principles and supplement the strategy with at least one trend indicator , which will allow you to see a clear direction of the trend, the profitability of the strategy will immediately increase significantly!