Inside Bar Explained + Trading Strategy -- with David Moadel
hello friends and welcome to looking at the markets with David Modell today I'm
going to explain what an inside bar is it's very simple so you're gonna want to
check out this video because knowledge really is power and it can help you with
your trading also I will give you a simple strategy that you can use to get
you started with understanding inside bars and you
know you can use it although I do not recommend using this strategy by itself
and it is not perfect the strategy does not work 100% of the time okay so please
be aware of that there's no perfect strategy here alright so what is an
inside bar well you need at least two candles and by the way it doesn't matter
what you know what each period is whether it's a you know daily
candlesticks or 1-minute candles or five-minute hourly whatever it is okay
these all apply the inside bar concept still applies regardless of the
timeframe okay so to know whether a candle or bar is inside you have to look
at the previous or preceding bar or candle okay and if the the high of that
period you know the top of the upper wick is lower than the preceding top of
the upper wick okay and then the bottom of the lower wick is higher than the
bottom of the preceding lower wick then it's an inside bar so in other words if
the high and the low of the bar is completely covered by the preceding bar
or candles high and low okay in other words if it's as they say if it's
engulfed completely by the preceding candle the one before it then it's an
inside bar alright you could look at it this way this bar is completely inside
of this one alright so and by the way you might ask well what if there is no
upper wick then just use the top of the body okay and then if there's no lower
wick just use the bottom of the body that's all to decide whether it's
completely engulfed by the preceding candle or bar that's it it's really
simple and often times technicians consider an inside bar to be
reversal candle again not a hundred percent of the time this is not perfect
does not always work alright but so imagine if you had you know candles or
bars going up up up up okay and then then you get an inside bar especially a
red one then you might think oh it's gonna reverse and then the next candles
might start to go down down down and the other way around all right so if it's
you know go on if you have candles going down down down and then you get an
inside bar especially if it's green then you might think oh I think maybe it's
gonna go up up up alright and and what a lot of people do is they'll draw lines
to measure it and I'll show you that in a moment
you know they'll draw a horizontal line at the high of the preceding bar and
then draw another horizontal line at the low of that bar of that period okay and
you'll see why in a moment but yeah so that's what an inside bar is or inside
candle candlestick whatever you want to call it alright and so here's a simple
strategy that you can use does not work perfectly please be aware okay it's not
perfect but okay so you have the preceding candles going down down down
alright and here's here's a candle and then look at the next one it's an inside
bar and it's green also alright notice that it's engulfed by the proceeded
preceding one okay and you might think oh maybe it's a reversal okay you could
either buy immediately or if you want to draw those horizontal lines you can draw
some horizontal lines what they did here actually was draw horizontal lines at
the top and bottom of of the inside bar interestingly enough so and you could
just draw some hard draw some lines there and then wait until you have
another candle that pierces above that high alright which is the top of the
wick of the inside bar here okay when you see a close above that then you can
buy there if you want to but you might want to set a stoploss a little bit
below the low of that inside bar alright and hopefully it'll go up up up alright
and then if you're into shorting which I do not recommend for beginners
okay short selling can be very dangerous dangerous for beginners only do it if
you know what you're doing and use very small position sizes and and respect
your stop losses if you choose to do it at all
and you don't have to do it but if you if you do choose to short sell then okay
so you have a trend that's up and then you get a an inside bar and it's a red
one too and a big red one and so that might indicate a possible reversal in
the making because you know here's the preceding bar and then the inside bar
completely engulfed by this one right and so what they did here was they drew
horizontal lines for the top and bottom of that inside bar all right
and then they waited until you had a close below or you waited just wait
until it pierced with a red candle below that low there and then they put their
stop-loss right above the high that horizontal line that they drew here the
high of that inside bar and fortunately here it worked out quite well it went
down down down but you know this is riskier because a short selling you
might just want to go long only if you want something a little bit safer
possibly all right it's an interesting idea
so there's your inside bar I hope you enjoyed it and learn from it and if you
really appreciate it want you go ahead and give this a thumbs up right now
please and leave a comment if you've tried it or you're interested in this or
you have suggestions for other videos and if you have not subscribed why not
do that right now alright go ahead and subscribe and hit
that notification bell so you'll be alerted whenever I put out a new video
like this one alright thanks a lot I appreciate it I'll talk to you again
soon