Understanding the Inside Bar Trading Method

If you are interested in cryptocurrency trading, perhaps you’ve heard of inside bar trading. The inside bar trading method is one of the most common price action strategies that any trader, new or experienced, can implement. So, let’s learn more about it here!

Of Candlestick Charts and Trading

Before we dive into the topic, it's vital to grasp what a candlestick chart is. A candlestick chart is an important technical tool that shows an immediate picture of market price changes. The rectangle that makes up the candle body informs the reader of opening and closing prices. On the other hand, the wicks, which are the lines that stretch from the body, indicate the asset's highest and lowest prices over a specific timeframe. Colours have meaning as well; green denotes prices are going up, whereas red denotes the opposite.

Inside Bars

Let us go back to the inside bar method now. An inside bar is a popular candlestick. It is composed of two bars: the mother bar and the interior one. What causes the inside bar to appear? It appears because the market is in a period of consolidation -  waiting for the next big move.

As Fred McAllen, author of Charting and Technical Analysis, said, “You don’t make money by trading, you make it by sitting.” It takes patience to wait for the trade to develop, for the opportunity to present itself. Let the market come to you, instead of chasing the market. Chart patterns are very accurate. They have proven their accuracy and predictability time and time again, but you have to wait for them to develop.”

How to Use Inside Bar Patterns

Traders can choose between two ways of trading an inside bar setup: it can be used as reversal or a continuation signal. Just keep in mind that no single method is guaranteed to work 100%. There is no perfect trading strategy. Most of the traders understand it and implement strict stop-loss parameters. And as stated above, patience and a positive financial mindset are crucial.

Technical Analysis & Crypto Beginners

While some traders use inside bar trading, we should mention that this strategy might not be that simple for beginners. The technicalities of crypto trading are overwhelming. That is why many beginner traders prefer to connect with a broker who can execute trades on their behalf.

There are platforms that provide newcomers with access to the most reliable brokerage services. If you are unsure how to find a reliable broker, consider registering at https://bitcoin-loophole.io, for example, that will transfer you to one of their top brokerage partners.

Conclusion

Technical analysis, candlestick charts and inside bars, in particular, can help traders place potentially profitable orders and reduce risks. There are many trading strategies to choose from, but in the end, a trader should pick one tailored to their specific needs. 

Please do not forget that the market fluctuates constantly. Due to its volatility, trading remains a risky venture. Carry out due diligence!