Inside bar strategies

[lexys]

what do you use to measure volatility?

Kevin was referring to volatility as measured simply by the length of the bar/candle: if you look on the chart he kindly posted, you’ll see that the arrowed bar is significantly shorter than its predecessor, often signifying exactly what he mentions.

[Kevin_LaCoste]

For the daily timeframe, I use ATR(5) to give me the “average” range. If a day’s range is less than 75% of ATR(5), then that gets my interest.

[Petre_Radu]

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.

I have one question related to your orders being triggered or not. So, let’s say that all the conditions for a long trade are met and you set up a buystop order. How long will you wait for that order to be filled? What are the conditions that will invalidate that trade, assuming that the order has not been filled yet?

For example, you have an inside bar that just formed. The EMAs are showing that you are in a clear uptrend and you set your orders. What would you do if on the next bar the trade is not triggered and moreover the price falls, so now your EMAs are no longer diverging, therefore not showing anymore an uptred? Will you delete the orders and wait for the next trade signal?

Thanks.

[Richard_Edwards]

Hi guys, enjoying reading this post. Can anyone show me some chart examples? This is a new trade for me but keen to learn more!!

[rajeshtrk1986]

hi lexys, is that possible to prepare a video or snapshots to explain the DIBS system.

[lexys]

hi lexys, is that possible to prepare a video or snapshots to explain the DIBS system.

Hi Rajesh - certainly not by me, I’m afraid. As I explained above, I didn’t even know what “DIBS” stands for: I hadn’t actually heard of it until I read this thread, the other day. (My own inside bar method is explained fully in post #3 on the first page, but that isn’t “DIBS”.)

[lexys]

I have one question related to your orders being triggered or not. So, let’s say that all the conditions for a long trade are met and you set up a buystop order. How long will you wait for that order to be filled?

I’ll let it sit there, really.

I don’t mind if there’s consolidation/congestion below the level of my long entry, for example, because if triggered, my entry will then represent a breakout of congestion, which I’d want to trade anyway.

For example, you have an inside bar that just formed. The EMAs are showing that you are in a clear uptrend and you set your orders.

I don’t use EMA’s, but ok …

What would you do if on the next bar the trade is not triggered

I don’t particularly expect it to be triggered on the next bar. It [I]can[/I] happen, of course, but I don’t mind, either way, really … it can sit there all day, from my perspective.

… and moreover the price falls, so now your EMAs are no longer diverging, therefore not showing anymore an uptred?

Well, in that case my entry-level would be just above such substantial resistance that it’s become a good entry (perhaps an even better one?) anyway, so I can leave it there?

I’m a “support and resistance breakouts trader” anyway, really - but that’s what these inside bar set-ups [U]are[/U]: they’re entering on the basis of the breakouts of S/R, aren’t they? What was just a “little local S/R” (at one end of the mother bar) can become a better entry, if the price retraces, or consolidates, or whatever, and then goes back up and hits it?

I’ll take it away before I finish for the day, though, because I don’t enter trades at night: I only do daytrading.

[danzka]

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.

sorry to bother, what is your preferred Timeframe when trading this?
and would you mind telling the profit factor too?
I’m currently learning Joe Ross stuff, thank you

[lexys]

what is your preferred Timeframe when trading this?
and would you mind telling the profit factor too?

Both answered in post #3, on the first page.

I’m currently learning Joe Ross stuff, thank you

I wish you well with it. I’ve found many parts of it timeless, realistic, productive and very helpful.

If you get the book [I]Trading The Ross Hook[/I], I particularly recommend the “Slaughterbeck entries” technique explained from about page 285 onwards - these are my highest profit-factor entries with Ross hooks, and there’s almost nothing about them online: the only forum thread discussion I’ve ever seen on the Slaughterbeck technique (elsewhere, not here) misdescribes it dreadfully, and is full of misinformation.

[danzka]

Both answered in post #3, on the first page.

I wish you well with it. I’ve found many parts of it timeless, realistic, productive and very helpful.

If you get the book [I]Trading The Ross Hook[/I], I particularly recommend the “Slaughterbeck entries” technique explained from about page 285 onwards - these are my highest profit-factor entries with Ross hooks, and there’s almost nothing about them online: the only forum thread discussion I’ve ever seen on the Slaughterbeck technique (elsewhere, not here) misdescribes it dreadfully, and is full of misinformation.

Thank you for replying
sorry I didn’t make it clear, I mean, your preferred Timeframe and its profit factor when trading the Ross Hook

[lexys]

Oops, sorry! On a “brighter day” I’d have realised you must have meant that. My misunderstanding … :8:

I trade Ross hooks from 15-minute charts (mostly because I routinely have 15-minute charts open, for all my other trading) but I’ll certainly take them from a 30-minute chart, as well. I get over 2.0 PF from them, and that’s even without being particularly selective with my entries. I just wish they showed up more often than they do.

[danzka]

Oops, sorry! On a “brighter day” I’d have realised you must have meant that. My misunderstanding … :8:

I trade Ross hooks from 15-minute charts (mostly because I routinely have 15-minute charts open, for all my other trading) but I’ll certainly take them from a 30-minute chart, as well. I get over 2.0 PF from them, and that’s even without being particularly selective with my entries. I just wish they showed up more often than they do.

Thanks man, will try all this Joe Ross entries, simple and lowrisk, love it

[sailormoon]

Both answered in post #3, on the first page.

I wish you well with it. I’ve found many parts of it timeless, realistic, productive and very helpful.

If you get the book [I]Trading The Ross Hook[/I], I particularly recommend the “Slaughterbeck entries” technique explained from about page 285 onwards - these are my highest profit-factor entries with Ross hooks, and there’s almost nothing about them online: the only forum thread discussion I’ve ever seen on the Slaughterbeck technique (elsewhere, not here) misdescribes it dreadfully, and is full of misinformation.

thanks for sharing this info, may i ask how you set your sl and tp and money management rules when you take this type of entries?

[lexys]

may i ask how you set your sl and tp and money management rules when you take this type of entries?

I normally enter 3 lots with a 15-pip stop-loss, close the first two lots at +8 pips (to cover costs and “pay for the third lot”), and then either close the third lot at +15 pips or let it run for longer, adjusting its stop-loss above/under the most recently-formed swings-high/low as it goes, depending on the circumstances.

[I]Sometimes[/I], depending on the price movements and perceived support/resistance, it makes sense to move the stop-loss on the third lot to breakeven quite quickly, thus locking in more profit than that.

It would also be perfectly sensible and viable to derive TP’s and SL’s from the pair’s current ATR, by methodical testing.

This is just what I’ve found suitable and convenient, myself … but what matters is that before you trade these with real money, you analyse the results of a minimum of 200 consecutive trades on demo (or for tiny “play-stakes”) and know that this trading-style gives you a collective “edge”, or “net positive expectation”.

My trade-management won’t suit everyone, I know. A “full win” makes me at least 31 pips, but a “full loss” (of 3 lots at 15 pips) costs 45 pips. Thankfully, full losses are extremely rare, and in my opinion and experience, the high strike-rate more than compensates for the less-than-overwhelming reward-to-risk ratio. But long experience of posting in this forum has taught me that some members would reject that proposal more or less on sight, as they prefer bigger R:R’s. For myself, I’m happy to take smaller profits more regularly, with a smoother equity-curve, because I always instinctively regard trading as being primarily about risk-control rather than about profit-maximisation.

[GlobusFX]

Hi
I’m currently testing DIBS strategy pretty intensively. In my strategy I’m using ATR on H1 timeframe to identify whether the breakout is valid or not. Why I’m doing it: I don’t want to use small inside bar patters - only the ones with serious movements - like 300+ pips.

[GlobusFX]

My trade-management won’t suit everyone, I know. A “full win” makes me at least 31 pips, but a “full loss” (of 3 lots at 15 pips) costs 45 pips.

In general it doesn’t really that bad. If statistically expected value is positive than it’s ok. The strategy and money management should only allow to wait out the not suitable market conditions and not to blow an account in 5-10 conseq loss trades.