Which leads me to one of my favourite topics – inside days. Which form the basis of many different production systems which I’ll be exploring with you over the coming months. For both stocks, futures, crypto and FX… there are strong edges here. (If you want done-for-you, professional grade systems with black and white rules, check out the System Building Masterclass) An inside period is a bar with a lower high AND a lower low than the previous bar. Like today on the 1hr chart of NZDUSD (I’m in this trade, posted it in the Facebook group)
The beauty of this setup is there is no guessing at market direction. You place BOTH a buy and a sell order, and go long if the market goes up, and short if the market goes down. Takes the guesswork out of it.
I’m adding a deep dive video to the Price Action Masterclass right now on these most bountiful of setups. In no particular order some salient facts about inside periods. – Inside days (daily bars) are a better edge than inside periods (shorter timeframes) EXCEPT in strongly trending moves. – All inside periods are not created equal, they range from crappy to superb – In rising volatility environments inside periods are a strong edge – In high volatility trending markets inside periods are a negative edge – In low volatility sideways markets inside periods are a negative edge. – Inside bars with the narrowest range in 4 bars, and the narrowest range in 7 bars are a far stronger edge, particularly for stocks. – In high volatility sideways markets inside periods are an acceptable edge – Wide range inside periods are a negative edge – Double inside periods (two consecutive inside bars) are an EXTREMELY STRONG edge.
A Fake out Inside Period is a much better edge than a regular inside period. This is because it traps one set of traders “wrong way”
If you are looking to go deeper with your understanding of this setup you really ought to check out the Price Action Masterclass. There are more details than I can convey in an email, and it really will help.