The Inside Bar Method

inside-bar-example

The blue bar is an “inside bar”

The Inside Bar Method is one of the simplest and most effective of the 2Chimps timing triggers. An inside bar is a bar that falls completely within the trading range of the bar immediately preceding it.

More precisely, to qualify as an inside bar, a bar must:

  1. have a high lower than the bar directly before it
  2. have a low higher than the bar directly before it

The appearance of an inside bar is a setup. In order to buy or sell, we must still wait for the trigger.

Trigger

For the inside bar method, the trigger comes on the third bar or it doesn’t come at all.

A buy is triggered if the third bar close above high of the first bar. A sell is triggered if the third bar closes below the low of the first bar.  See below:

inside-bar-buy

inside-bar-sell

If neither of these conditions are met on the 3rd bar, then there is no trigger (see the series of trades below for examples of “no trigger” inside bars).

Follow-Through (1st profit target and risk)

Your first profit target is calculated at half the range of the first bar of the pattern. See below:

inside bar profit target

Risk is calculated as the full range of the first bar of the pattern. See below:

inside bar stop example

Example

Here’s an example of a series of trades using the inside bar method. Notice, most inside bars do not trigger a trade, but those that do generally hit their first profit target within a couple of bars.

inside bar series

A Brief Note on Our Strategies

At 2chimps.net, we do our best to familiarize you with our various strategies. If you have visited other trading websites, then you know that most of them will not reveal their methods to you.

If these trading methods are revealed to you, it’s done in a way that leaves the methods subject to interpretation. Many methods include the use of mythical or mystical trading concepts with no basis in reality. Our recommendations are reality-based, and frequently, we provide historical track records (as in the case of our seasonal trades).

When you are learning our methods, please remember that all of our trading methodologies consist of three phases. These are: the setup, the trigger, and the follow-through. Without follow through, you can still lose money even if your setup and trigger are 100% correct! Follow through includes a profit maximizing strategy as well as risk management, and both are crucial to the success of the trade.

Position size and exit strategies are very much dependent upon your individual financial situation. Therefore we do not make blanket statements about performance because we are not privy to your individual level of risk tolerance or your ability to trade various position sizes. However, our methods and procedures remain objective. With sensible and clearly defined profit maximizing strategies, they have the potential to be very profitable.