Inside-Bar Breakout Entries with Prior-Bar Stops and Risk Sizing

Summary

This document describes a long-side inside-bar breakout setup. It identifies a bullish candle whose high and low remain within the previous candle's range, then defines a potential buy level just above the inside bar's high and a stop just below the prior candle's low. The distance between entry and stop determines the risk percentage used to calculate position size for a chosen dollar risk and leverage. The code also derives break-even and profit target levels from that distance, although the shown strategy entry uses a fixed limit price and cancels under a separate price condition rather than implementing the described breakout order.

The material stresses that stop placement affects both risk and potential gains and recommends testing stop levels and adding filters. It does not provide performance results, and the source itself says the example is for testing order cancellation and position sizing rather than a ready-to-use strategy. The sizing discussion is explicitly for longs; adapting it for shorts requires changes. Published settings show a BTC/USDT Binance futures test using three-minute bars and one-minute base data.

Key ideas

• A bullish inside bar is defined by a green candle whose range sits within the previous candle's range.
• The proposed long entry is just above the inside bar high, with a stop just below the prior low.
• Position size is calculated from the dollar risk, stop distance, and selected leverage.
• The supplied strategy code uses a fixed limit price and cancellation condition, so it does not directly implement the described breakout entry.
• The example is for long-side sizing and provides no evidence of trading performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.