The Inside Bar Indicator is a unique candlestick or bar chart based price action method that offers an early indication of a breakout. The inside bar is identified as the candle or bar that has a smaller range, including open and close compared to the previous candlestick or bar.
When an inside bar is formed, it potentially signals a consolidation as traders pause before a strong momentum led breakout follows. The inside bar is formed on any time frame, from the 1-minute charts to as high as 1 month charts. Still, the meaning remains the same. Not all inside bars work out and traders need to pay attention to the previous price action.
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An inside bar that forms after a strong upward or downward price action can most often signal a retracement in prices at the very least on an upside breakout of the inside bar, or could also signal a continuation of the previous trend on the downside breakout.
Inside Bar Indicator Settings
While there are many versions of the inside bar indicator for MT4 floating around, this particular version of the inside bar doesn’t offer much for traders, except for pointing to a comment which shows the time at which the inside bar was formed on the time frame the indicator is attached to.
The Inside Bar Indicator settings are very simple and have only one option, which is to set the number of previous bars. The default value is 4. What this setting means is that the indicator looks for the number of inside bars to be formed. If you set a value to 1, it will look for only one inside bar. If the value is changed to 4, then the indicator specifically looks for 4 inside bars to be formed.
Once the inside bar is added to the charts, you will see a comment on the top left corner of the screen, which shows you if an inside bar meeting the requirements is formed or not, along with a timestamp of the session.
In the above chart, the Inside Bar Indicator shows a comment on the top left corner “2016.06.29 07:41 Inside Bar.” As you can see from the above chart, the inside bar was formed with 4 candles trading inside the range (marked by the red lines, which is only a visual depiction).
After the breakout of the inside bar, the comment remains until a new inside bar pattern is formed.
Drawbacks of the Inside Bar Indicator
Initial use of the Inside Bar Indicator shows that there are some big drawbacks. For example, having the option to plot horizontal lines on the range of the inside bar would in fact be a great way for traders to visually watch the levels and can be helpful to quickly set the stops and entry levels.
The lack of any popup or sound alerts means that traders have no clue when an inside bar is formed, which is one of the biggest drawbacks of the indicator. However as long as you have only one chart on your screen, this shouldn’t be a problem.
Overall, the Inside Bar MT4 Indicator is fairly decent tool that can be added to your toolkit.
Inside Bar Indicator – Recommended Time Frames
Technically speaking, you can use this MT4 indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.
Inside Bar Indicator Download
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Leave us a comment below to let us know your thoughts on this indicator. If you like this indicator, you might like see other indicators that we have carefully selected that will help you in your trading journey.
And if you can, you really should invest in a proven MT4 Expert Advisor to help you generate some profit on full autopilot. We highly recommend this powerful MT4 Expert Advisor.
Visit our Free MT4 Indicator Download page. We hope you have enjoyed this post as much as we have creating it. Good luck and thank you for your readership.
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