A candlestick pattern is a common tool in the trading arsenal of most forex traders. Traders rely on the tool because it helps them determine, at a glance, the current state of the market. Just by looking at the length and color of a candlestick pattern, forex traders can quickly determine if the market is becoming bearish or bullish. There are several technical best metatrader indicators designed to track candlestick patterns on the market. One of such indicators that is like a game-changer is the Inside Bar Indicator MT4.
It is easy to use and designed for traders who are interested in trading the bar patterns. It can identify the inside bar pattern; thus, making the lows and highs in a chart. Additionally, the tool is formed when the price trades within the low and high of a previous candle. While it is plotted based on the closed candles only, it works on all timeframes. It also has an alert system like MT4 alerts and email.
Another benefit of using the candlestick chart is that it enables traders to see the direction of the market easily in real-time. The color and shape of the tool are also beneficial to traders, as traders can easily spot when the market is experiencing a bearish spike. What’s more? With the candlestick chart, traders would be able to use specific bearish and bullish reversal patterns that are not visible on other charts.
Today, you will learn what the indicator is capable of doing, how to use the indicator, and how to install the indicator to improve your trading strategies.
What Is An Inside Bar Pattern?
The Inside Bar Indicator MT4 is a technical indicator that is formed when the second candle is engulfed with the high and low of a previous candle. The indicator looks very similar to the bearish or a bullish harami candlestick pattern.
The inside bar pattern is also formed when the sentiment and market price is positioned in one direction alone. If the inside bar candle is formed, the buyers and sellers will become reluctant to push the prices below or above the previous candle’s low and high. Ultimately, the indicator reflects indecision on the market.
The major parameter you need to pay attention to when using the Inside Bar indicator MT4 is the “period to find inside bars.” The period should be set at one hour. The color pattern, by default, is Green and Red. You can adjust the default color to any color of your choice.
How To Trade Using The Indicator
While the inside bar indicator is readily available on the chart, it doesn’t mean you should trade at every slightest opportunity. The perfect time to trade using this indicator is when the pattern is found at the resistance/support area, Fibonacci levels, pivot levels, or near the trend line. Most veteran traders use this tool to trade when it is formed at 61.8% near the Fibonacci levels.
When To Buy
Traders seeking buying opportunities should ensure the market trend is in an upward trend. There are several indicators you can combine with the inside bar indicator (e.g. moving averages) to identify the bullish trend and the direction of the trend.
Remember to place a stop-loss below the indicator’s low. Also, remember to exit the market at major resistance levels.
From the chart above, the market was previously in the major support area. The chart shows the correct time to place a buy order to make a profit.
When To Sell
Traders seeking for selling opportunities should ensure the market trend is in a downward trend. There are several indicators you can combine with the inside bar indicator (e.g. moving averages) to identify the bearish trend and the direction of the trend.
When the market reaches a significant resistance level, you can then place a sell order when you spot the inside bar pattern. Remember to place a stop-loss below the indicator’s low. To exit your trade, look for a major support level.
The chart above was previously in a downtrend direction. From the above screenshot, the sell order was placed after the indicator was aggressively formed.
Installing The Indicator
Use these steps to install the indicator:
1. Download the Indicator file from a reputable source to a location you will easily remember.
2. Copy the file to an MT4 indicator directory.
3. Restart or start your MT4 trading platform.
4. Select the timeframe and chart you wish to apply the indicator.
5. Search the MT4 indicator directory for the volatility indicator.
6. Right-click on the indicator and attach it to the chart
7. Adjust the default settings and press okay
8. Now the indicator should appear on your chart.
How To Apply The Indicator On Your Chart
Use these steps to apply the indicator on your chart:
1. Select the currency pair you wish to use
2. At the top of the chart, go to the “insert” toolbar.
3. Go to the Custom tab and navigate to the indicator list.
4. Select the Inside Bar Indicator MT4
5. Follow the instructions to apply the indicator to the chart.
6. The indicator should appear on the chart.
Bottom Line About Inside Bar Indicator MT4
Candlestick chart pattern is critical as far as the forex market is concerned. The Inside Bar indicator MT4 is a great technical indicator to behold if you must make consistent profits across different timeframes. Traders can use the indicator to correctly predict when to enter a new trade position or exit an old trade.
You can combine the Inside bar indicator with other technical indicators to increase your potential of earning and improve your trading strategies. Only place a buy order when you observe that the market is in an upward direction. Conversely, place a sell order when the market is in a downward direction.
We have a wide variety of technical indicators here on our platform. You can check the Indicators section from this link for a list of the best forex indicators to combine with the inside bar indicator.