October 7, Inside Bar Strategy Binary Options This is what makes binary options trading so much different than gambling: every trader gets an opportunity to execute an analysis and create a solid strategy.
Its relative position can be at the top, the middle or the bottom of the prior bar. Some traders use a more lenient definition of an inside bar that allows for the highs of the inside bar and the mother bar to be equal, or for the lows of both bars to be equal. Inside bars show a period of consolidation in a market. However, they can also form at market turning points and act as reversal signals from key support or resistance levels.
The classic entry for an inside bar signal is to place a buy stop or sell stop at the high or low of the mother bar, and then when price breakouts above or below the mother bar, your entry order is filled.
Note, often in strong trends like the one in the example below, you will see multiple inside bar patterns forming, providing you with multiple high-probability entries into the trend: Trading Inside Bars against the Trend, From Key Chart Levels In the example below, we are looking at trading an inside bar pattern against the dominant daily chart trend.
Inside Bars Binary Options Strategy
In this case, price had come back down to test a key support levelformed a pin bar reversal at that support, followed by an inside bar reversal. Note the strong push higher that unfolded following this inside bar setup.
In this case, we were trading an inside bar reversal signal from a key level of resistance. Also, note that the inside bar sell signal in the example below actually had two bars within the same mother bar, this is perfectly fine and is something you will see sometimes on binary options inside bar charts. Inside bars at key levels as reversal plays are a bit trickier and take more time and experience to become proficient at.
Inside binary options inside bar work best on the daily chart time frame, primarily because on lower time frames binary options table are just too many inside bars and many of them are meaningless and lead to false breaks.
Practice identifying inside bars on your charts before you try trading them live. Your first inside bar trade should be on the daily chart and in a trending market.
Inside bars sometimes form following pin bar patterns and they are also part of the fakey pattern inside bar false-break patternso they are an important price action pattern to understand. Inside bars typically offer good risk reward ratios because they often provide a tight stop loss placement and lead to a strong breakout as price breaks up or down from the pattern.
For more information on trading inside bars and other price action patterns, click here. Price Action Strategies.