We want to trade the most liquid month, so when the new month becomes more liquid that's when we change. one can trade a less liquid month but you're more likely to have slippage and violent price moves against your position.
One way to confirm a 15 minute inside bar is a lower time frame........take for instance the first inside bar we had on Friday.......you will notice that a 1-2-3 reversal pattern had set up on the 5 minute chart.( See attached screen shots)
Hope you are having a great weekend.
The following 6 users say Thank You to Jeff Castille for this post:
Just one more...........let's take a look at the 15 minute inside bar that developed on Wed afternoon.......you'll notice that a 1-2-3 reversal pattern on the 5 minute chart was great confirmation! Also the time of day was good as this is typically when you get the "push into the close."
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Today I was in a trade then an IB formed helped move my stop. It dont go my way for -7 ticks but I quickly reversed in the break for +21. IB can also serve as caution signal if your in a middle of a trade.
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My observations concerning inside bars are NOT applicable to smaller time frames........also, it seems that CL exhibits the type of volitility that makes these inside bars more successful than they would be on other instruments. If you are interested in inside bars I suggest putting the Reversals indicator on your chart a studying a few months worth of data and note which ones work and which ones fail and try to determine why. Could be the time of day.....proximity to news events.....high level speeches etc......
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Although it has it's place in terms of maybe giving an initial indication (a baseline if you like) of the sort of success/failure rate you could have and whether it is worth investigating further.
IMO backtesting manually yourself is a good way to go. I.E go back a number of months and start with start of the day on right edge and just watch the bar unfold as you go thru bar-by-bar. This way you can work out the success rate of your strategy, but in addition you can also add discretion as you are in effect sort of 'trading live'. You can also see the whole day as it unfolds and have an opinon on whether it is looking like a trend day, range etc etc..
An added advantage is that you are observing price action to improve your eye and it can be done outside market hours. It does take time though and you can spend countless hours watching bar-by-bar...but this is not wasted effort in my view, as it gives you screen time. I've spent tons of hours doing this over the past year or so, and it's tough to take when you begin to see how a favourite setup etc is not all you thought it would be and it has to be chucked away (at worst) or at the very least modified and tinkered with. Anyway, I'm digressing a bit.
Good thread though...I'll have a proper look thru when I get some time.
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