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Inside Days

Inside days can be a profitable trading pattern when identified and traded correctly. An inside day occurs when the high of the current day (day 2) is lower than the previous day's (day 1) high, and the low of day 2 is higher than day 1's low, meaning day 2's price action is "inside" the range of day 1. There are two methods to trade inside days - either placing buy/sell orders a few ticks above/below the high/low of day 2, or monitoring intraday price action at day 2's high/low and entering on the first move higher or lower on a smaller time frame. It is best if the trade works on day 3, and to cancel it if not

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94 views2 pages

Inside Days

Inside days can be a profitable trading pattern when identified and traded correctly. An inside day occurs when the high of the current day (day 2) is lower than the previous day's (day 1) high, and the low of day 2 is higher than day 1's low, meaning day 2's price action is "inside" the range of day 1. There are two methods to trade inside days - either placing buy/sell orders a few ticks above/below the high/low of day 2, or monitoring intraday price action at day 2's high/low and entering on the first move higher or lower on a smaller time frame. It is best if the trade works on day 3, and to cancel it if not

Uploaded by

Anonymous sDnT9yu
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We take content rights seriously. If you suspect this is your content, claim it here.
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Inside Days

Inside days can be very profitable if traded correctly. First of all it is necessary to identify
an inside day.

At the close of the market you are following take a note of the high and low for that day
(day two). For it to qualify for an inside day the high must be lower than the high of the
previous day (day one) and the low of the day must be higher than that of the previous
day.

In other words the bar (day 2) must be inside that of the previous day (day one). This is
the set up. I like to trade this in two ways.

The first method is to place a buy order a few ticks above the high of day 2 and a sell
order below the low of day 2. Once your orders have been placed it doesn't matter which
direction the market goes you will have a position.

You can place your stop loss order in one of two ways. You can use a dollar amount or if
the inside day (day 2) is not too large you can place a stop loss a few ticks above the high
of the inside day. If you are taken short or a stop loss a few ticks below the low of the
inside day if you are taken long.

I like this trade to work on day 3 only. If it has not worked on day 3 I cancel the trade. It
may still work after day 3 but in my research it tends to make the most gains if it works in
day 3.

The second method is to first identify an inside day on a daily chart and then trade it
intraday. If you are trading intraday you can monitor price action at the low or the high of
day 2 and either enter the market as the high or low of day 2 is taken or enter on the first
rally or dip as the case may be on a smaller time frame.
Good Trading

Best Regards
Mark McRae

Information, charts or examples contained in this lesson are for illustration and
educational purposes only. It should not be considered as advice or a recommendation to
buy or sell any security or financial instrument. We do not and cannot offer investment
advice. For further information please read our disclaimer.

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