1-Trade the bigger time frames
I’m not against trading lower time frames, you can trade this setup on
5 minutes time frame using other technical indicators to filter your
signals and take just high probability setups.
But you have to be an experienced trader, if you are beginner
i recommend you to stick with trading this signal in bigger time frames
such the daily and the 4-hour time frame.
Trading this setup on lower time frame will increase your chance to
overtrade the market and take low probability price action signals. And
this is the quickest way to blow up your trading account.
If you focus just on bigger time frames, this will allow you to set and
forget your trade instead of being emotionally controlled by the
market.
2- Trade the dominant trend
You should start trading inside bars in line with the direction of the
market, especially in a strong bullish or bearish trend, but don’t never
try to trade it against the trend if you are a newbie.
When you feel like you master trading this pattern with the trend, you
can move to trade range bound markets, and counter trends.
3- Trade only from key levels
Remember that not all inside bars are worth your hard-earned money;
there are specific locations where this setup works great, so make sure
that your signal is located in a key level in the market.
4- Find different factors of confluence
Trading with confluence means combining different signals to make
the best trading decision.
To trade using this concept you need to look for a point in the market
where two or more levels are coming together and wait for an obvious
signal to form.
This trading method will give you confidence in your trading approach
and it will allow you to avoid over-trading.
How to trade the false breakout of the inside bar candlestick
pattern?
Have you ever placed an order with confidence thinking that the
market is going to go up, but price hints your stop loss before it starts
turning out to your predicted direction?? I have been a victim of stop
hunting, and i was very disappointed, but that happens several times
in the market.
Banks and financial institutions know how we trade the market, they
know how we think, and where we put our stop losses and profit
targets, this is the reason why they could easily take money from us.
One of the most famous strategies that big players use to take money
from novice traders is called stop loss hunting strategy.
This strategy consists of driving prices to a certain level where there
are massive stop loss orders, and the purpose is to create liquidity,
because without liquidity, the market will not move.
Once stop losses are hunt, the market goes strongly in the predicted
direction.
The interaction between big participants and novice traders create
repetitive patterns in the market, one of the most important
candlestick pattern that illustrates how big financial institutions
manipulate the market is the inside bar false breakout pattern.
Your understanding of this repetitive setup and your ability to detect
it on your charts will help you better exploit it to make money instead
of being a victim of market makers and banks manipulations.
This price action signal is formed when price breaks out from the inside
bar pattern and then quickly reverses to close within the range of the
mother bar.
See the illustration below:
As you can see, there are two types of this price action pattern:
A bullish inside bar false breakout that forms when the market is
trending down and it is also considered as a bullish reversal signal
when it is formed near a key support or resistance level.
A bearish inside bar false breakout that occurs in a bullish trend and it
is seen as a bearish reversal pattern when it is found near an important
level in the market.
This setup can be considered as a continuation pattern if it is traded
with the trend.