Set Up the Inside Bar Orders Precisely
Posted: Wed Oct 28, 2026 6:40 pm
Set Up the Inside Bar Orders Precisely
The mother bar on a four-hour EUR/USD chart has a high of 1.1080 and a low of 1.1030, a range of 50 pips. The next candle is an inside bar with a high of 1.1070 and a low of 1.1040.
Define the orders with a 3-pip buffer. Buy stop at 1.1083. Sell stop at 1.1027. Each cancels the other when filled.
Choose the stop for a long. Option one is the opposite end of the mother bar, 1.1027, risking 56 pips. Option two is the midpoint of the mother bar, 1.1055, risking 28 pips.
Choose the target. A measured move equal to the mother bar range from the breakout: 1.1083 plus 50 pips, which is 1.1133. Reward 50 pips.
Ratios: option one, 50 divided by 56, 0.89. Option two, 50 divided by 28, 1.79.
So the midpoint stop looks twice as good. The cost is that it is closer to price, and a pullback after the breakout reaches it more often. The full stop survives pullbacks but offers a ratio below 1 unless the target is larger.
How would you decide? Test both rules on thirty past inside bars and compare expectancy. In many samples, the tighter stop has a lower win rate but better ratio, and the net result depends on the market.
Also check mother bar size relative to ATR. A mother bar of 50 pips on a pair with a four-hour ATR of 30 is large, and gives wide, unattractive stops.
Exercise: apply both stop rules to ten inside bars and tabulate the results.
The mother bar on a four-hour EUR/USD chart has a high of 1.1080 and a low of 1.1030, a range of 50 pips. The next candle is an inside bar with a high of 1.1070 and a low of 1.1040.
Define the orders with a 3-pip buffer. Buy stop at 1.1083. Sell stop at 1.1027. Each cancels the other when filled.
Choose the stop for a long. Option one is the opposite end of the mother bar, 1.1027, risking 56 pips. Option two is the midpoint of the mother bar, 1.1055, risking 28 pips.
Choose the target. A measured move equal to the mother bar range from the breakout: 1.1083 plus 50 pips, which is 1.1133. Reward 50 pips.
Ratios: option one, 50 divided by 56, 0.89. Option two, 50 divided by 28, 1.79.
So the midpoint stop looks twice as good. The cost is that it is closer to price, and a pullback after the breakout reaches it more often. The full stop survives pullbacks but offers a ratio below 1 unless the target is larger.
How would you decide? Test both rules on thirty past inside bars and compare expectancy. In many samples, the tighter stop has a lower win rate but better ratio, and the net result depends on the market.
Also check mother bar size relative to ATR. A mother bar of 50 pips on a pair with a four-hour ATR of 30 is large, and gives wide, unattractive stops.
Exercise: apply both stop rules to ten inside bars and tabulate the results.