How to Use Inside Bar Trading Strategy (2024)

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.Our article will discuss the Inside Bar trading strategy and how to identify ideal price levels with the same.

What is Inside Bar trading?

Inside Bar trading involves a series of several bars occurring in a range (either upwards or downwards) which allow you to identify potential breakout, reversal or continuation signals. Every succeeding bar in this pattern has a higher low and lower high than the preceding bar. It has at least two candlesticks in the pattern: the Inside Bar and the Mother Bar.

  • A Bearish Inside Bar occurs when the Mother Bar is a large red (bearish) candlestick followed by a short green (bullish) candlestick. This indicates a bearish continuation pattern and signals traders to place short orders. However, if the short green candlestick appears after a prolonged series of red candlesticks, it may indicate a bullish market reversal and signal you to place long orders.
  • A Bullish Inside Bar occurs when the Mother Bar is a large green candlestick followed by a short red candlestick. This indicates a bullish continuation pattern in the market and signals traders to place long orders. However, if the short red candlestick appears after a prolonged series of green candlesticks, it may indicate a bearish market reversal and signal them to place short orders.

How to Use Inside Bar Trading Strategy (1)

Identifying an Inside Bar

The Inside Bar can be identified in two easy steps –1. Find the existing trend using the technical indicators or price action analysis.
2. Locate a candlestick that is completely engulfed by the preceding candle’s high and low. This will be the Inside Bar.If the preceding bar is a red candlestick, the Inside Bar will be a green candlestick, and if the preceding bar is a green candlestick., the Inside Bar will be a red candlestick.

Top characteristics of an Inside Bar strategy

Time frame

The Inside Bar pattern works best on a daily time frame. Any timeframe shorter than this does not provide accurate signals as the prices are influenced by noise, and the pattern may occur several times without any solid market signal. On the other hand, any timeframe longer than this may be too spread out for the Inside Bar pattern to provide ideal market continuation or reversal signals.

Trending market

The Inside Bar pattern works best when the market is currently trending. The stronger the trend, the easier it is for the pattern to provide a reliable signal. If the market is not showing any certain trend, the Inside Bar pattern will not be able to form due to the uncertain market movement.


The size of the Inside Bar with respect to the mother Bar depicts how accurate the bar setup signal will be. The smaller the size of the Inside Bar compared to the Mother Bar, the higher the chance of the market signals being accurate and vice versa. Ideally, the Inside Bar should form within the Mother Bar’s upper or lower half.


An Inside Bar formation right after a price breakout in the current trend provides the most accurate signals. This is because it indicates that the current trend is going to end, and the market will reverse. This enables traders to place short orders during an existing uptrend and long orders during an existing downtrend.

How to trade with the Inside Bar pattern

1. Identify potential breakout level

In most cases, the development of an Inside Bar indicates a market consolidation which means that the existing trend can reverse in the near future. Identify if there is going to be an upward breakout during an existing bearish market momentum or a downtrend breakout during an existing bullish market momentum. If the currency pair prices diverge from the existing trend before the price consolidates, a reverse price breakout is confirmed.

2. Consider trading with medium-term charts

The Inside Bar pattern provides the most reliable signals when traded on a medium-term chart like a daily chart. This is recommended because, on a medium-term chart, Inside Bars have a larger sample size and occur only at the actual levels where the market can actually reverse. Additionally, the Inside Bar pattern provides even more accurate signals when clubbed with a technical indicator like RSI.

3. Open a position based on Inside Bar levels

Once you have identified the Inside Bar, you can open a forex position in the continued or reversing market. Open a position with a market trend continuation expectation when the currency pair price is still trading between the Mother Bar’s high and low-price levels as the market is expected to continue.However, you can also place an entry order just above the uppermost level of the Inside Bar with an expectation of market reversal. The more the difference between the Mother Bar and Inside Bar, the higher the chance of the market reversing and vice versa.

4. Place a stop-loss order

The last step to using the Inside Bar pattern is to always place a stop-loss order. Since Inside Bars can either indicate a breakout or continuation signal, there is no guarantee that the market will move in the direction of your analysis/prediction. Hence, stop-loss orders help in minimising trade risk.

  • Place the stop loss order below the lower price level of the Inside Bar when placing a long order.
  • Place the stop loss order above the higher price level of the Inside Bar when placing a short order.

Trade with the Inside Bar strategy to ace the forex market

Trading with the Inside Bar strategy can help you identify strong market reversal or continuation signals. Our forex trading platform allows you to experiment with different strategies through a demo account before you open a live account and deal with actual money. Get started with Blueberry Markets today.Sign up for a live trading account or try a risk-free demo account.

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How to Use Inside Bar Trading Strategy (2024)


How to Use Inside Bar Trading Strategy? ›

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.

Is inside bar trading profitable? ›

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.

What is the inside bar pattern in trading? ›

An “inside bar” pattern is a two-bar price action trading strategy in which the inside bar is smaller and within the high to low range of the prior bar, i.e. the high is lower than the previous bar's high, and the low is higher than the previous bar's low.

What is the 15 min inside bar strategy? ›

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.

What is the success rate of inside bar? ›

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.

What is the 3 bar strategy? ›

What Is a 3 Bar Play? It's a popular but simple strategy of recognition of reversal based on 3 bars that signify a bullish or bearish trend after a sustaining trend in the opposite direction.

Is inside bar bullish or bearish? ›

An inside bar can be either bullish or bearish, depending on its context within the price action. If it forms within a downtrend, it can be considered bearish, indicating potential continuation. If it forms within an uptrend, it can be seen as bullish, suggesting a potential continuation of the upward trend.

Does the color of the inside bar matter? ›

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.

How do most day traders make money? ›

Day traders try to make money by exploiting minute price movements in individual assets (stocks, currencies, futures, and options). They usually leverage large amounts of capital to do so.

Is inside bar the same as harami? ›

An inside bar is also similar to a bullish or a bearish harami candlestick pattern. The main difference being that with an inside bar, the highs and lows are considered while the real body is ignored.

How do you trade double inside a bar? ›

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.

What is the inside bar false breakout strategy? ›

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.

What is the NR7 inside bar strategy? ›

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 the 5 bar strategy? ›

As its name refers, a five-bar reversal indicator includes the determination of 5 candlesticks in a row to spot a reversal in the current trend. Moreover, it is a short-term technical indicator with either five bullish candlesticks or five bearish candlesticks consecutively.

What is the pin bar inside bar strategy? ›

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.

Is Inside bar a good strategy? ›

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.

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