Inside Bar Trading Revisited

Thanks, that's what I thought. So for the EA to TP at 1/2 ATR, say 15 pips, then 1/2 of all trades are going to fail.

Anyone know how these stats are calculated? Is it just the size of the bar that breaks the IB, or does it look at the following bars. (I don't think it does, otherwise trends would make an appearance with >100pip trends, and there aren't any.)

Lies, damned lies and statistics

Different brokers = different numbers. A 1 pip difference could mean the difference between a bar being an inside bar or not.

The statistics only look at the bar following the IB.

I just did a crude test with 1 hour data that shows 52% going to 15 pips within the next 8 bars. Only 8% went past 100 pips

SETUP...

http://i39.tinypic.com/fxw8ys.gif

Did you check the draw down distribution, too?

I used a crude spread sheet. Took no consideration for smaller IB's that may have been inside of bigger ones. In that case the small IB breakout may have been 30 pips but the breakout of the larger one may have been only 10 pips.

Have not been able to figure out a way to determine draw down on a spread sheet. Hard to write a formula that can determine what time you entered a trade and then the low or high price after that.

Can you guys restrict the time of the day?

For example, 6GMT to 14 GMT.

I have a question. I hope it hasn't been answered already.

What if there are two inside bars... the second IB beeing an IB to the previous.

example 100 pip bar
followed by 75 pip bar
followed by 50 pip bar (of course the 75 and the 50 pip bars falling within the range of the 100 pip bar,.... aaaaaaaaand as if i need to say it,... the 50 pip bar falling within the range of the 75 pip bar.

Do you use both IBs or just the most recent?

Gosh i hope this makes sense.

I am not sure about this on EA, In real case, this may indicate sideways movement?. Better to stay out, or get in and out wiht few +ve pips or at BE.

Using 1/2 hour data on EUR/USD for the past 8 months (more volatile that first half of last year) and going out 10 bars the percentages look a little better.

1629 total IB's
10% made 107 pips
20% 76
30% 60
40% 45
50% 36
60% 28
70% 21
80% 13
90% 7

The EA only trades the latest IB.

I did write an EA that placed pending limit orders on both sides of every IB, that didn't seem to perform any better, though I may revisit it in light of the recent developments in this thread.

Today's trades

It makes sense. I always use the most recent.

AB -

You just made my plan to grab 10 pips look like: 1) a good possibility and 2) a good probability.

Thank you for your work. p

When I did the last percentage sheet I noticed there were only about 1100 IB's during that time frame but about 500 broke each side.

once a while i use IB but more into 4hrs TF

PS: very high risk so i use small pips..

That is what I do: pending limit orders on both sides and if one get's filled cancel the other - or if the signal validation time is over - cancel both.

Hi MJ,

I just left them both so if the price reversed both could get hit. Played around with different expiry times and different timeframes on EURUSD. Nothing struck me as being particularly profitable. I'll run it again with a smaller TP and see if that's better.

hi 1ka,

I must temporary stop my tests -- my PC is not able to handle all this over 80 bots running simultaneously and my main test system is doing quite OK so I prefer testing on that.

Seems I have to go one step at the time http://www.forexfactory.com/images/icons/icon12.gif

On my journal I put a link to your thread.



I still want to point out that it might be worthy to check out if the DIBS rule:

Only be willing to buy a market if it is up on the day.
Only be willing to sell a market if it is down on the day.

Makes a difference.

Post #23

Trading the "hot hand": Trading the strongest/weakest market is actually really simple. For example, yesterday the Eur/Usd was up more proportionately than the Usd/Chf was down. This was because the Usd/Chf wasn't even a down day. Definitely off its highs but not down relative to last week's close. The Eur/Usd was up, up and away! So that is the market you buy.

And I did! I'm sure I had company from this group.

In the pit the first thing you learn--- when you are ready to actually make money..., and stop the bleeding, is:

1. Only be willing to buy a market if it is up on the day.
2. Only be willing to sell a market if it is down on the day.

Obviously, it would logically follow that the currencies which are up more are better buys and the ones down more are the better shorts. So basically, if you get a buy setup forming on two strong currencies, take the trade on the one up most on the day.

This actually means that you never go short a currency unless it is "down" relative to yesterday's close; or go long for any reason unless the market is "up" on the day.

Review for yourself how many large losses you could've eliminated from your past trades if you followed these rules. At the same time, I am certain you would have eliminated very few of your biggest winners by doing this.

Think about this for a while. I have for decades. The power of this simple concept still amazes me.

I'm sure this sounds simplistic to everyone, and maybe this stuff is obvious to you all, but I doubt it. How many times do you find yourself buying a weaker currency instead of the stronger one, thinking that the weaker one "has" to catch up, or the stronger one has already moved as much as it is likely to already.

Always buy setups in the strongest daily markets, always take sell orders in the weakest daily markets.

Not sure how that applies for lower time frames.