I’m currently using DIBS system on the 1hr and 4hr charts with good rate of success. Anyone that uses the inside bar strategy, can you please state how you approach it and any indicator you may use in conjunction with it.
Thanks.
Hi Calin,
Just read your post and realise that you didn’t reveive any responses. A pity indeed.
Are you still pursuing dibs? Please feel free to PM me if you are and we can share trade setups/ideas/etc.
kr,
Ayden
Hi Guys,
I don’t know what “DIBS” stands for, and a quick look in Google didn’t tell me, but I’m guessing something like “Daily Inside Bar Set-up”?
I trade inside bar set-ups from spot forex charts every day, anyway: it’s one of my regular set-ups for major forex pairs, and is profitable overall, for me.
My method is terribly simple: in an uptrend, I enter long by buy stop 2-3 pips above the high of the mother bar; in a downtrend I enter short by sell stop 2-3 pips below the low of the mother bar.
I put the initial stop-loss 2-3 pips above/below the most recent swing-high/low.
(One could derive a take-profit target, for trading a single lot, from the ATR and/or recent S/R levels.)
I trade three lots, closing the first two at half the SL-distance plus 0.5 pips, to cover dealing costs and effectively “pay for the third lot”, and then I let the third one run, adjusting its stop-loss manually above/below the most recently-formed swings high/low [I]on the M15 chart[/I] to which I switch, having opened a trade from an M30 chart.
I have an overall Profit Factor of 1.5 - 1.7 with this method.
I don’t open long trades just below recent resistance or “-00 numbers”, or short trades just above recent support or “-00 numbers”.
I don’t trade around significant news/fundamentals announcements.
I’ve done a lot of backtesting, and found that this works steadily and reliably on H1 charts or anything longer. I can also make it work on M30 charts (and I do) with careful money-management and attentive trade management. I wouldn’t want to trade it on any charts faster than that.
That’s about it - simple, and it works for me.
1 Like
There’s at least 1 thread out there discussing it, which appeared near the top of my search list.
The DIBS Method… No Free Lunch continues @ Forex Factory
Basic summary:
hello Lexy
Simple and effective tactic. I m sure the result are consistent. Is there a certain pair/index you focus on?
EUR/USD and GBP/USD more than others, but that’s only really because I watch those more than others for my various other set-ups, too. My backtesting results weren’t significantly different on other “major pairs”. I’ve looked also at AUD/USD, EUR/JPY, GBP/JPY, USD/JPY, USD/CAD and USD/CHF and would happily trade this set-up on any of these - they’re the only 8 pairs I routinely look at.
An “inside bar” pattern is a two-bar price action trading strategy in which the inside bar is smaller and within the high to low range of the prior bar,
Thank you for sharing your tactics. I never tried price action, but they way i trade is almost identical, i just did not know they call it price action. I m starting to have a look at it. i m assuming this works best for active pairs with tight spreads.
I remember not knowing this, and suddenly realising it, too! I learned to trade price-bar patterns from old books of my father’s, written before people ever talked about “price action” as a way of saying “without indicators”, I think. 
Nowadays the term “price action” refers to a variety of techniques like the one above, as well as some scalping techniques such as the ones discussed by authors like Bob Volman (excellent stuff, by the way), Al Brooks, Lance Beggs and others.
Yes; I’m sure that’s right.
Thank God you posted: heaven knows where we’d all have been, if you hadn’t (for reasons best known to yourself) pasted in that definition from the priceaction.com website as a forum post. I see all your other posts here make similarly stimulating reading, too … :33:
I will have a look at those authors, so much good stuff out there that has been overlooked. May i know who your father is? from the way you talk about him, it seems he is one of the pioneers in the business. people like that deserve a lot of credit for paving the way for others. It was a tough journey in my days.
I’m sorry, Oceanmen - I really worded the post above [B]very[/B] carelessly: please excuse me! :eek:
I realised only on reading your reply that by saying “old books of my father’s”, I had made it sound like he wrote them. I meant only “books he had read a long time ago, kept, and eventually passed on to me”. Several of them were written by Joe Ross in the 1980’s and 1990’s: [I]Trading By The Book[/I], [I]Trading As A Business[/I], [I]Trading The Ross Hook[/I], [I]Trading By The Minute[/I] (now republished as [I]Daytrading[/I]), and so on. (My father has, however, been a professional trader since before I was born and is now involved in a small offshore hedge-fund, where he trains the traders. But the stuff he’s written himself comprises “internal company training material” only - not published books.)
[I]Trading The Ross Hook[/I] (by Joe Ross) actually explains in great detail a similar technique (and based on exactly the same principles) to the Inside Bar method discussed just above.
Thank you for sharing Lexys. I am looking at “Trading The Ross Hook”. Very insightful. Will check the other books you mentioned as well.
You are lucky to have a father like that. If he trains the traders it means you do not have to look too far for a mentor. I had to learn the “trial and error” way. Would you agree that the old timers had a better sense of price behavior than the new traders? I do think so, especially when you have tried plotting prices manually on graphic paper before computers were so popular. The good old days!
Hi Lexys,
Thanks for your post.
Your method is relatively similar to mine. The original DIBS method was traded on hourly with a bias towards a certain candle as the daily open time and price and only buying above and selling below.
I think I understand your method, but for complete newbies “terribly simple” might not apply. You mention you trade with the trend. The question, especially for beginners, is how to define “the trend”. Do you use classic HH/LLs, MA crosses, indicators etc etc. Then of course, looking at HHs and LLs, you might be seeing an uptrend that is merely a reversal pullback on a larger TF downtrend. I could go on, but I think you understand.
Essentially, with any ‘place the stop above swing H or L’ strategy, one assumes (hopes) price will continue and not range. That then becomes the biggest issue, avoiding ranges. Few things in trading annoy me more than so called coaches telling newbies all about ranges … AFTER the fact. A very large part of profitably trading, imho, is defining a ranging market WHILE it’s happening.
Ultimately, an IB is just a way of trading a continuation within what one might perceive as a trend. In your case, you’re using the mother bar as an entry boundary. Effectively therefore, if you looked at that same trade on a lower TF, you’re trading a breakout from a boxing of price, in the direction of your analysis bias of the trend. I would suggest that if you’re entering after the mother bar, rather than the IB, you’re selling a breakout of price consolidation. If however you were selling/buying the break of the IB, your reward opportunity would be greater, your risk the same (the high of the swing in your case) but the logic is different. You’d be entering after price (and order flow) congested within a bar, whereas trading the motherbar is essentially trading breaks of price consolidation across multiple bars - at least 2 by definition in this case.
My questions to you in order to help other newer traders.
- How do you define trend?
- How do you deal with trend vs range?
- What is the underlying logic to entering on the motherbar break?
Thanks again and great post! :23:
Ayden
I think that for beginning/inexperienced traders, a really simple two-part answer covers this question …
-
[U]Key concept[/U]: a trend exists only within and with reference to a [I]specified time-frame[/I] (it’s common for the price of any instrument to be trending in one direction in one time-frame and in the opposite direction in another).
-
[U]Simple method[/U], to tell: draw 15-period and 50-period EMA’s. If the 15 is above the 50 while both are rising and diverging, then there’s a clear upward trend [I]within that time-frame[/I]; if the 15 is below the 50 while both are falling and diverging, then there’s a clear downward trend [I]within that time-frame[/I]; if neither set of parameters obtains, then there isn’t a clear trend [I]within that time-frame[/I].
That’s simple and unambiguous enough, I think?
I trade only set-ups that arise during a trend.
(I don’t, of course, suggest that this is “the only way to trade”, but for beginning/inexperienced traders it’s a very simple and straightforward way of trying to be on the right side of the market and significantly increasing their overall win-rates.)
The breakout of a mother bar (just like the breakout of a “Ross hook” - which I also trade - and for the same reasons) is evidence of the possible/probable resumption or continuation of a trend, after a retracement, consolidation or congestion. (And those are more common than reversals).
It’s no guarantee of a successful trade, of course, but it’s one way of stacking the deck in your favour rather than against yourself.
Hi Lexys,
Thanks for the info.
Can you also give some info about ‘the breakout of a Ross hook’ or a link to a website where it is explained ?
Thanks,
Steven
I don’t know quite what the etiquette is, in posting here a link to another forum, but [B]this thread[/B] - old though it is - is the best “forum discussion” of Ross hooks I’ve seen, and Joe Ross himself has posted in the thread.
My own information, when I started trading these, all came from the textbook [I][B]Trading The Ross Hook[/B][/I] by Joe Ross. I trade preferentially the “Slaughterbeck bars” technique, described on pages 285ff of the book, about which I’m afraid there’s very little information available online.
Time to step in the feet of your father and start your own thread ? 
He doesn’t post in forums … (and his shoes wouldn’t suit me!).
I use a similar method, although I specifically look for a significant drop in volatility, rather than just an “inside” bar. If the market’s trending, but you have retracement, and there’s a drop in volatility during that retracement, then that tells you that orderflow is coming in to resume the trend.
Hey Kevin,
what do you use to measure volatility?