Trading Strategies Revealed – “Inside Bar” review

Trend reversal trading strategy “Inside Bar” is designed mainly for Forex and can be used on all currency pairs on any time frames. Its rules state that:

A trader should place a buy stop order at a high of the signal candle upon an Inside Bar pattern during a downtrend. A sell stop should be placed at a low of the signal candle upon Inside Bar pattern during an uptrend. The stop loss should be placed at the a high/low of the signal candle with 1:2 Risk-to-Reward ratio. To define trend we have used a combination of Fractals indicator and 3 EMAs with 10, 25 and 50 periods.
For more information please refer to https://priceaction.com/price-action-university/strategies/inside-bar/.

For our test, we have used a Trailing Stop which is launched after a trade has started and is modified each new 1 pip of profit. From our point of view, such approach allows to maximize profit and minimize drawdown. We have run the test for 2010.01.01-2019.05.22 using Control Points modelling on EURUSD-H1, with no leverage, without reinvestment, assuming spread equals 10 ticks, with starting balance 10000. These are the main parameters of financial performance, that may allow you to evaluate whether this strategy worth your attention or not:

ROI# of tradesWinning ratioMax. drawdown
5.51%314235.30%15.25%

The following charts may give some possible insights on which filters to apply (time sessions, day of week limitation, trend strength threshold, overbought/oversold conditions, volatility range) to turn this strategy profitable should you decide to use this strategy in your investment portfolio:


Analysis Insights



1. There were more profitable trades at ADX lower than 50 while trading “Inside Bar” trading strategy during 2010 – 2019. Since “Inside Bar” is a trend reversal strategy and ADX shows the power of a trend it is more reasonable to take trades at the beginning of a trend when ADX is low. Using ADX filter increases profit 4 times.

2. Buy trades have had a bigger profit ratio at Stochastic value lower than 80, while sell trades – at Stochastic more than 20 when trading “Inside Bar” trading strategy during 2010 – 2019. Since Stochastic shows overbought and oversold zones it is more reasonable to take sell trades at a higher value of Stochastic and buy trades at a lower value. Stochastic filter increases your profit on 600%

3. Our analysis of “Inside Bar” trading strategy during 2010 – 2019 has shown that usage of optimized trailing stop reduces the drawdown 3 times and increases the profit 2.5 times when trading this strategy.

4. We have analyzed the data related to “Inside Bar” trading strategy during 2010 – 2019 and applied indicators filters to increase ROI from 5.51% up to 38.73%.

ROI# of tradesWinning ratioMax. drawdown
38.73%180438.47%4.11%


If you decide to buy an EA, coded in accordance with the strategy and used for the test, or to make any amendments to the original strategy rules – please, feel free to contact us.

Our company specializes on automated trading systems and trading indicators development for the most popular trading platforms, such as MetaTrader 4/5, NinjaTrader 7/8 and cTrader.

If you need your own automated trading software designed based on your individual requirements, make a request for a free consultation with our team of professional programmers and find out the cost and terms of your project development.

More detailed info about our services for particular trading platform you can get at the following pages of our web-site:

MetaTrader 4/5 https://www.nordman-algorithms.com/metatrader-programming
NinjaTrader https://www.nordman-algorithms.com/ninjatrader-programming
cTrader https://www.nordman-algorithms.com/ctrader-programming

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RISK DISCLOSURE

Trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical or Simulated performance results have certain limitations, unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

Please note, that testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.