How to Trade The Inside Bar Pattern

One of the most occurring patterns in stock markets is the Inside Bar Pattern. This is prominent as it is hard to decide what will the next move be as this pattern can be a continuation or a reversal pattern (as well). In this article, we’re going to discuss how you can trade this pattern using the Inside Bar Strategy and what other factors contribute in deciding whether a reversal is coming or the trend would continue.

What is an Inside Bar (Image credits –

Before moving forward, it is important for you to keep in mind that this pattern occurs very frequently. However, it is very tricky to predict whether a reversal is coming or if the price action is just haunting for a bit before moving further downwards.

Trading an Inside Bar Pattern Based on News Sentiment

Sometimes the news sentiment plays an important role in determing the movement of the price action. The strategy here would be – If the stock is in a downtrend and if a bad news about the stock comes, then chances are the support is going to get broken and a fall can be continued.

Inside Bar Strategy (Downtrend)

Similarly, if the stock has already formed an Inside bar pattern and is hovering around some specific levels, chances are that when a good news like a good result (or any appreciated action taken by the management) is declared, the price action may reverse and reverse.

Reversal due to a positive news.

Trading based on Support and Resistance Levels

Identifying Support and Resistance Levels can also be of great value if you’re looking to trade in this pattern. Generally, if the pattern occurs at a major support level, then there are high chances that a short-term reversal is due. Similar is the case with the Resistance levels. Do checkout out our article on getting started with Technical Analysis if you’d like to know more about Support and Resistance areas.


Next, we have breakouts and breakdowns that can help you in confirming the direction of the price action. For example, if the pattern has already been formed and the next candle breaks the low of the ‘mother candle’ (forming a new lower low) then there is a high chance of the price moving downwards. Similar is the case with a breakout.

Things to know before trading this pattern

Though the risk to reward ratios in trading Inside Bar patterns is pretty high, yet novice traders should not trade this.

Why? Since this pattern can be identified pretty easily, many traders get excited and opt-in to take up a position without waiting for other signals to confirm their strategy. And since this pattern is highly unreliable (reversal or continuation can happen), there is a 50% chance that the traders might book a loss.

Also, if the price action goes into your favour, then remember to set up a strict target and stop loss. Why? This is because historical data suggests that a reversal after this pattern has occurred is very much possible. One way to set up the targets can be identifying the next immediate strong support/resistance level and wait for price action to achieve it.

Lastly, although there are website or articles that have blatantly put in links to books and long articles for you to read, we think that by simply understanding the basics (mentioned above) can set up your fundamentals pretty straight.

You can move to reading books when you thoroghly know the basics and can identify which piece of information is useful and which is not..

We hope you like this article. Do follow us on Twitter for more updates.

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RSI Indicator Strategies And How To Use It Effectively

Indicators are very well known within the trading community. Indicators though lagging act as great confirmation signals. In this article, we’re going to understand what does RSI mean, what are possible RSI Indicator Strategies and how you can use these strategies to enter a profitable trade.

In this article, we’re not going to dive deep into the definition of RSI, how it is calculated and other formulas. We’re going to jump right into a quick introduction and then discuss how you can implement RSI Indicator in your intraday trading.

What does RSI mean?

In order to understand what role RSI plays and how you can effectively use RSI in your strategy, remember that RSI (Relative Strength Index) is a direction (momentum) indicator. Also, it is important to know that it oscillates from 0 to 100. We’ll understand what these levels mean later in the article.

Through direction, you could easily identify the current trend of the instrument you’re trading.

For example, let’s say you are all set up to trade AAPL (Apple Inc.) on a 15-minute timeframe. You analyse the support and resistance area levels and figure that the price action has given a positive bullish breakout (via price action). However, what if this is a false breakout or if the market is going to go sideways? You could be easily trapped if you try to go long.

Well, RSI can help you figure that out. With the RSI Indicator Strategies, you could not only identify if the stock can possibly go in a range or not but figuring out if the stock is already in the overbought/ oversold zone and if any further upward movement of the stock is possible or not.

Setting up the indicator

To implement RSI, you can go to the indictors section of the platform you’re using to view the chart and type RSI to active the indicator.

Default RSI settings

We’re going to change the RSI settings in our case. Click on the settings wheel icon and set the length to 5. We’re changing the length as we want the indicator to react faster to the changes in the price action.

RSI Indicator settings

Know when the market in Range Bound

By default a rectangular area (between 70 and 30 RSI levels) is highlighted for you. If it isn’t, just understand that whenever the signal line hovers in between these two RSI levels then it means that the market has gone sideways.

RSI signal line bounces between the 70 and 30 levels indicating a range bound market

Above chart is of Tesla – 30 minute timeframe. You can see that there isn’t much of a change in the price of the stock for a considerable period of time. The only noticable difference is when the RSI signal line breaks down near the end, and when the signal crosses the 70 mark at the end.

Thus, as long as the Relative Strength Index of the stock doesn’t break the 30 and 70 levels we can say that the market is choppy or range bound.

Breakout or Breakdown confirmation

You may have partially got the idea of how to confirm a good breakdown/breakout. Notice that in the chart above, we can see a breakdown (in the RSI section) near the end. However, the price didn’t go down instantly. Why? That is because the price action was at a strong support level and hence it quickly bounced back.

However, at the end, you can see the indicator gave an early breakout, indicating that the momentum of the stock is strong and in upward direction (bullish).

Needless to say, support and resistance play a very important role in deciding the movement of the price action. Hence you should consider trying out an indicator if you want to confirm your analysis.

Overbought and Oversold Zones

Knowing about the overbought and oversold zones can be a great trading opportunity for you. However, in order to accurately identify these zones, you should set up another RSI indicator with default settings.

Let’s see how.

Click here to enlarge

In the above image (AAPL – 1 hour), we can see that whenever the RSI signal line crosses the 80 mark, then the stock price either goes downwards or sideways. This is known as the overbought zone and it is assumed that when the signal line enters the overbought zone, the price action halts for a moment or breaks down.

Similarly, if the signal line crosses below the 20 mark, it is assumed that the stock price is now in the oversold zone and correction of the price is due.

It is important to note that this situation will not arise frequently. However, it is important to not miss this opportunity when it arises as this strategy works almost always.

We hope you like these RSI indicator strategies and have learnt something valuable through this article. Do follow us on Twitter to stay updated.

How to Generate Regular Income from Stock Market

Majority of the people always think of investing in a stock market as ‘Gambling’. Majority of the people also don’t believe that they can generate income consistently from the stock market itself. That is why you might have seen trading QnA blogs and forums flooded with questions like “How can I generate regular income from short term trading”, “Can traders become millionaires?”, “Is investing in stock market safe?” and so on.

In this article, we’re going to discuss some tips that can help a novice trader/investor like you, who is new to the market and looking to generate a steady income by investing in stocks.

Do not invest in Mutual Funds

While you may have heard of many people talking about how they’ve invested millions of dollars of their savings in mutual funds, it is not necessary for you to follow their advice!

Mutual funds are for those who don’t know anything about stock markets or don’t want to know. They are handled by experts and are generally suitable for those who’ve parked their money for a long duration. There are short term mutual funds too, but investing in any fund would mean that you’re trusting someone else to invest your hard-earned money. Not that it’s wrong in any way, but you wouldn’t gain any knowledge about the markets if you do that. Also, short term mutual funds often have a lock-in period (3 months). So technically, you’d be charged some extra bucks if you tried to redeem your investments before that stipulated time period.

Hence, you’d have to completely avoid investing in mutual funds if you’re trying to generate income consistently.

Learn the basics terms used in Stock Markets

This idea would be obvious to you, however, many people don’t realise learning about the markets first and then investing. The result? Huge losses. These are the people who then label investing in the stock market as gambling.

Nobody ever became successful in a skill without learning anything about it. Be it shooting an arrow, playing Football or learning Math, if you want to earn from that skill, you’ve got to learn about it first. And to be clear we’re not suggesting to learn everything about stock markets here. Simple terms and their significance in the market can help you quickly make your way through achieving small income daily from the stock market.

Terms like Large Cap, Mid Cap, Small Caps and their importance in the stock market can give you ideas about some stocks that are not that volatile and can generate steady profits in a short span of time.

Find a mentor

A mentor is someone who can guide you in understanding the stock market in an easier way. They often teach you about concepts and basics of how chart patterns work and what should you learn about a particular stock before investing all of your money in it. They are just like teachers who lay down a path for you (like a course curriculum) so that you know what chapter to move on after reading and practising the existing chapter. Some mentors also give inputs (buy/sell call) and their strategies on trading a particular stock the next day, because they can foresee a possible momentum in the stock. You should bag every chance of understanding what they’re trying to say and why do they believe the stock would experience a huge momentum in some days.

Also, nowadays, there are mentors who do personalised coaching and who can support you and answer your queries. So yes, having a mentor that you can look up to definitely helps in the learning.

Useful terms to consider

Delivery Percentage is just another term in the stock market that you can look up to for taking short term trades. This term is highly underrated but it can give you an insight into whether the stock is going to go up or not. Delivery percentage means the number of people who have invested in the stock instead of buying and selling it on the same day. You know there is something cooking up when you see the average delivery percentage shoot up from 50% to 80% (this means people are investing in this stock heavily).

Volume is a great indicator which can tell you a lot about the movement of the stock. We’ve discussed briefly about Volume in this PDF. An increase in volume means that a huge momentum is taking place while at the same time if the volume remains stagnant for a few sessions, it is assumed that the stock is consolidating and going sideways.

Support and Resistance is another important term to consider if you’re looking to trade in the market. Marking support and resistance levels is crucial if you want your trade to be a profitable one. Almost every trader uses/analyses support and resistance levels before taking up any position.

Lastly, knowledge about candlesticks is must if you want to survive in this game. It is rightly said that every candlestick which is formed on the chart has some story behind it. It is also true that by studying the latest candlestick that is formed on the chart, you can predict where the price of the stock might move next.

We really hope this article gives you an insight on how to generate regular income from the stock market. If you’re looking for some more knowledge/tips and tricks, then download our free PDF on Price Action Strategies.

Do follow us on Twitter to stay updated.

Getting Started with Technical Analysis

When we start out to learn something new, where do we first head out to? The internet. The internet is filled with knowledgable content if you wish to use it for that purpose and when it comes to learning Technical Analysis, then too there are no surprises. If you’re a beginner who’s just heard the word Technical Analysis then look no further. ‘Getting started with Technical Analysis’ will provide you with a detailed guide on learning technical analysis from scratch.

Start with learning about components of the chart

Be it any professional intraday trader, they always know their charts before entering into a trade. A chart is a graphical representation of the price action datapoints. Charts are the only components that can help you analyse charts quickly and accurately (all by yourself).

Not to forget if you can understand the physcology of the market (whether the price is going to up or down) by looking at the chart itself!

Free online resources to consider:

  • Learn CandlesticksLink
    • The first component that you should learn is Candlesticks. These are sort of the primary components and without understanding what a candlestick is, you cannot just learn the market psychology or technical analysis.
    • Once you are done with understanding what candlesticks are, the next item to learn is about candlestick patterns. No matter what strategy you’re using, just knowing about the candlestick patterns can help you as a confirmation signal. Thus aiding you in taking only fruitful trades and preventing you from the bad ones. You can find various free online resources on this topic.
  • Time FramesLink
    • Once you’ve understood what candlesticks are, the next topic is to learn about different time frames. Why? Well, time frames are your best friend when it comes to intraday trading/ swing trading or just investing. For example, by switching over to a longer time frame you would be able to identify the resistance/support levels (covered later) and the current trend of the stock.
  • Indicators
    • Indicators are widely used and heavily relied on by some traders. In short, Indicators give you signals based on historical data. The fact that they are based on past data makes them very accurate and if you really know how to use them, you can create a winning strategy for yourself too.
    • Click on this link to learn more about indicators.

Learn about basic principles of Technical Analysis

Now that you are familiar with the charts, you might want to learn the basics of technical analysis. For example, you should clearly know what are and how to draw the support and resistance levels on the chart. There are a lot of video series/tutorials on youtube for this. However, we found this version of the explanation quite easy to understand.

Once you understand the basic principles of technical analysis, do learn the patterns that the candlesticks form. We recommend checkout out Sasha’s channel on Youtube (link).

Practise reading the charts before you trade

One problem that arises when you’re soo hooked into reading charts is that you want to practice your analysis instantly. Not that it’s a bad thing, however, we wouldn’t adivce you to use real money just yet.

What you can do is – do paper trading. Paper trading simply means that you trade with virtual money and make/lose virtual money only. All of this is for free and you don’t need to bother about spending cash before you begin to trade. We recommend using TradingView’s Paper Trading feature for this.

Find a source from where you can confirm your analysis

When you’ve paper traded for quite some time and you’re confident that you earn some real cash in the market, it is time to take the leap. All you need to do is open an account with your broker and then get started placing orders.

It is often beneficial to verify your analysis with some other sources before actually taking up any position. Be it from a renowned technical analyst that you follow on social media or software as a service that you’re subscribed to.

Understand that Profit and Loss are part of the game

An often missing component when learning about technical analysis is that people forget about their money management strategies. They only focus on drawing lines on charts and defining levels.

Money management simply means managing your risk apeptite. So that if you book a loss, you can have plenty of backup fund to trade with the next day. Why the next day?

For beginners, it is often recommended to do only one trade per day. This helps a trader to conserve their booked profit and not do overtrading. On the other hand, if you’ve booked a loss then there is a high chance of you taking up another trade to compensate for the lost amount. The term for this is revenge trading (don’t do that).

There are various other free online resources that can teach you more about such methodologies that can help you strategise and plan accordingly.

Lastly, although there are website or articles that have blatantly put in links to books and long articles for you to read, we think that by simply understanding the basics (mentioned above) can set up your fundamentals pretty straight.

You can move to reading books when you thoroghly know the basics and can identify which piece of information is useful and which is not..

We hope you like this article. Do follow us on Twitter for more updates.

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