Inside Candle Trading

Inside candle trading... take heed when this setup is noticed, especially if an overbought or oversold indication is noticed as well, observe the position of the Ema 200 (major trend) apply the "safety net" method and immediately trade the SAR indicator in that direction.

An overbought or oversold indication is when the price is at or has spiked one of the very top or bottom Bollinger bands!

So what is inside candle trading?

An inside candle as seen in the charts below (highlighted red), is a candle that forms inside the previous candle, its highs and lows must never exceed that of the previous candle.

This is a very powerful trend reversal signal, and provided the Ema 200 confirms the direction of the overall trend, I would trade the SAR indication that follows, provided that it complies with the "safety net" method.

If the above is met, there is no need to wait for the two lower moving averages to stack up in the required order, provided the trend direction is confirmed.

An inside candle is valid only if it has resulted immediately after an overbought or oversold indication (spikes and peaks to the Bollinger bands); otherwise it is not a valid inside candle!

I find Inside Candles show up frequently in Forex Trading, look for an inside candle on any time frame, including the one you trade with, the trick is when you spot one, place your trade with the following SAR signal. As can be seen in the above and below charts

After a trade has started to go in your favour, I would suggest that you apply trade management and stop losses to protect any profits and minimise any losses.

If any one of the high or low of an inside candle is the same level as the previous candle, than it is still considered a valid inside candle.

"Safety Net" of trading an important addition and a must with this method. Know "when to enter" and "when to stay out!"

Inside Candle Trading with FOREX

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