Inside Bar Breakouts with Range-Based Stops and Targets

Summary

This strategy treats an inside bar as a candle whose high and low both fall within the prior candle’s range. The direction of that prior candle selects a pending breakout order: a bullish prior candle leads to a buy stop above its high, while a bearish one leads to a sell stop below its low. The order offset, stop, and target are expressed as percentages of the prior candle’s range. The parameters include a 10% entry offset, 20% stop distance, 80% target distance, and a setting to risk 2% of equity per trade.

When a new qualifying pattern appears, the rules cancel pending orders and close an existing position before setting fresh orders. The document says the setup is better suited to trending conditions and flags false signals, tight stops, missed targets, and costs from frequent trading. It offers possible filters and risk adjustments, but provides no performance results; its published BTC/USDT futures test window is short, so it cannot establish robustness across markets or regimes.

Key ideas

• An inside bar has a high below and a low above the corresponding levels of the prior candle.
• The prior candle’s direction determines whether the strategy stages a long or short breakout order.
• Entry offsets, stop distances, and profit targets are defined relative to the prior candle’s range.
• A new inside bar cancels pending orders and closes an open position before orders are reset.
• The document identifies false signals, ranging markets, trade frequency, and parameter choice as risks, without reporting results.

Tags

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