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How to Combine Inside Bar Breakouts with ATR-Based Volatility Filtering?

Last Updated on March 24, 2025 by Arif Chowdhury

As a seasoned Forex trader since 2015, I’ve seen it all.

I know the struggles and frustrations that come with trying to find a reliable trading strategy.

You might be asking yourself:

  • How can I identify the right entry points?
  • What tools can help me manage risk effectively?
  • Is there a simple way to filter trades based on market conditions?

In this article, I’ll break down how to combine Inside Bar Breakouts with ATR-Based Volatility Filtering.

This strategy not only sharpens your trading edge but also fits seamlessly into my broader trading approach—one that has led to consistent profitability.

Let’s dive in!

Understanding Inside Bar Breakouts

Inside bars are a powerful price action pattern.

They form when the current bar is entirely contained within the range of the previous bar.

Here’s why they matter:

  • Indicate consolidation: Price is pausing before a potential breakout.
  • Signal potential volatility: A breakout from an inside bar can lead to significant price movement.

How to Identify an Inside Bar

  1. Look for a bar that fits snugly within the previous bar’s high and low.
  2. Confirm the pattern with other indicators or price action signals.

Why Use ATR for Volatility Filtering?

The Average True Range (ATR) measures market volatility.

It tells you how much the price typically moves over a specific period.

Using ATR helps you filter trades based on current market conditions.

Here’s how:

  • High ATR: Indicates high volatility, suitable for aggressive entries.
  • Low ATR: Suggests a calmer market, ideal for conservative trades.

In fact, statistically speaking, traders using ATR-based strategies often see a 25% improvement in their win rate compared to those who don’t.

Combining Inside Bar Breakouts with ATR

Now, let’s combine these two powerful tools.

Here’s a step-by-step guide:

Step 1: Identify an Inside Bar

  • Wait for the formation of an inside bar.
  • Ensure it’s formed after a strong trend, either bullish or bearish.

Step 2: Check the ATR

  • Calculate the ATR for the timeframe you’re trading.
  • Set a threshold (e.g., only trade if ATR is above a certain level).

Step 3: Set Your Entry and Stop Loss

  • Entry: Place your buy/sell order just above/below the inside bar.
  • Stop Loss: Use the ATR to set your stop loss. For example, 1.5 times the ATR value can be a good rule of thumb.

Step 4: Monitor the Trade

  • Allow the trade to run without interference.
  • Use a trailing stop based on ATR for optimal exit points.

My Trading Bots and the Inside Bar Strategy

I’ve developed a portfolio of 16 sophisticated trading bots that utilize the Inside Bar Breakouts with ATR-Based Volatility strategy along with many others.

These bots are designed for long-term trading, aiming for gains of 200-350 pips.

Here’s how they can help you:

  • Diversification: Each currency pair—EUR/USD, GBP/USD, USD/CHF, and USD/JPY—has 3-4 specially designed bots, minimizing correlated losses.
  • Backtested Performance: My bots have been backtested for the past 20 years, consistently performing well even in tough market conditions.
  • Free Access: You can access this entire EA portfolio completely FREE.

If you’re serious about trading, check out my trading bots portfolio.

Finding the Right Forex Broker

After setting up your strategy, a reliable broker is essential.

Choosing the right broker can significantly impact your trading experience.

Here are some key factors to consider:

  • Tight Spreads: Look for brokers offering low spreads to maximize profits.
  • Execution Speed: Fast order execution can save you from slippage.
  • Customer Support: Reliable support is crucial for resolving issues quickly.

I’ve tested several brokers and recommend checking out the best forex brokers for a superior trading experience.

Final Thoughts

Combining Inside Bar Breakouts with ATR-Based Volatility Filtering can be a game-changer.

This approach allows you to pinpoint optimal entry points while managing risk effectively.

Take advantage of my 16 trading bots to automate this strategy and enhance your trading results.

And don’t forget to partner with a trustworthy broker to ensure your trading journey is smooth and profitable.

Happy trading! 🚀