Best Inside Bar Indicator

Hello, dear friends!

The model of the Inside Bar is one of the fundamental Price Action models, the performance of which has been tested for decades. But, despite the simplicity of the setup, the search for a correctly formed model requires the trader to be mindful and assiduous, that by definition the resources are exhausted. It is much easier to give this task to an indicator that automatically signals the appearance of a new model on the chart. The name of this indicator is InsideBarSetup.

What is the Inside Bar

Following from the title, the inside bar is inside the boundaries of the previous. Its maximum is always below the maximum of the previous one, but the minimum is always higher. In the traditional model, it is meant that the size of the inside bar is much smaller than the previous (external) bar. That is, after an active rally, the market takes a “breath” and the price is temporarily consolidated before another move.
In addition to the models themselves, the indicator displays full sets on the graph. The essence of the setup is to trade on the breakdown of the boundaries of the inside bar. This is one of the most popular ways to sell this model.

Setting the indicator

In the installation of the indicator, here is nothing unusual - the installation process is similar to any other indicator for MT4. In the terminal, go to File - Open Data Folder and move the “InsideBarSetup” file to the MQL4 Indicators folder, and then restart the terminal.

The author of the indicator did not stint on the settings - everything can be customized to suit your preferences. Four blocks are responsible for the basic settings of the indicator.

• Inside Bar Minimum Size in points;
• Limit Second Bar - The maximum size of the inner bar in percent relative to the outer bar;
• Use ATR Filter to Limit Second Bar Size;
• Period for ATR Filter - the period of ATR;
• ATR Percent Limit for First Bar - the maximum value of the ATR of the inner bar relative to the external bar;
• Entry Break plus Points - the number of points added to the entry point (false breakdown filter).

Stop-Loss:

• Calculation Method - a method of calculating stop loss;
• Plus Points - surplus points to stop loss;
• ATR multiplier - ATR coefficient for calculating the stop;
• ATR period - the period of ATR.

Take-Profit:

• Calculation Method - the method of calculating the take profit;
• 1 plus points - the number of additional points to the first take;
• 2 plus points - the number of additional points to the second take;
• ATR Period - the period of ATR for the calculation of the take;
• 1 ATR multiplier - coefficient. ATR readings for the first take;
• 2 ATR multiplier - coefficient. ATR readings for the second take;
• TP1 Reward - the multiplier of the first take relative to the calculated value;
• TP2 Reward - the multiplier of the second take relative to the calculated value.

The remaining settings are responsible for changing the appearance of the indicator and enabling / disabling notifications.

The found setup is displayed at the bottom of the bar with some similarity to the David Star. The color of this star can be changed in the settings. For the current setup, the area of the external bar (red zone) is shown - the location for placing pending orders and stop levels (stop and double take). Also, in the upper right corner, the numerical values shown in the graph are duplicated.

Recommendations for usage

The model should be used only on large TFs, preferably from H4 and higher. If it’s really unbearable, you can trade the setup on H1, but with the condition of having a good filter from the price noise.

The most primitive way to break through the setup is to determine the direction of entry by the color of the inner candle. But, such a method is not very reliable, and besides, an internal candle in the case of a properly formed setup may not have a body at all, or have a too small body.

But, many people will agree with the fact that it is ungrateful to enter into a position against the trend. Why risk, when the market itself prompts the most probable direction of the price? The model of the Inside Bar, as we have already found out, is a breakdown, and therefore the probability of a false breakdown in one direction or another is approximately equal to the probability of a real one.

Even adding the simplest trend filter, you can see how much of the false signals are filtered out. As such a filter, for example, you can use an exponential MA with a period of 100. In fact, the period depends on the TF you are trading on, but for H1 a hundred will be necessary. As a rule, the larger the timeframe, the shorter the indicator period is needed.

We will assume that we are dealing with a downtrend when the price is below the MA, and rising when it is above the MA. Thus, if the Internal bar is formed below the MA, we only sell short. To do this, we only set a sell order - Sell Stop.

Also, pay attention to multi-level setups. The embedded Inside bar is a very strong signal. Such a setup indicates a longer consolidation, in connection with which we can expect a stronger price move after.

An equally strong signal can be obtained by forming an Inside Bar near important key levels. If the level has been tested many times in the past, the probability of rebound from it is much more likely than a breakdown. Therefore, in this case, it is reasonable to trade from the level.

Conclusion

The versatility of the Inside Bar model for someone seems to be a disadvantage, for someone, on the contrary, an advantage. In any case, if you are trading Price Action patterns, the InsideBarSetup indicator will save you a lot of time. In this case, you will have much more time for reaction and thinking about the entrance, which can directly affect the profitability of the trade.

Download Inside Bar Indicator

Regards, Michael

ForexTraderPortal.com