# Inside bar breakout: a strategy to learn and test | DT Academy > A candle inside the one before it: trade the break of the bigger candle. [Strategy Library](https://www.thedtterminal.com/academy/strategies) Price action # Inside bar breakout An inside bar is a candle whose whole range, wicks included, sits inside the candle before it (the mother bar). It shows a pause. You place orders beyond the mother bar and trade the break, best in a trend or at a level you marked. When the break fails and price snaps back inside, that is the fakey, which some traders trade the other way. Beginner Forex, indices, gold, crypto Any session H4, D1 [Use this strategy](https://www.thedtterminal.com/login?signup=true&from=academy&entry=strategy_use&redirect=%2Fjournal%2Facademy%2Fstrategies%2Finside_bar_breakout) [Practice it](https://www.thedtterminal.com/login?signup=true&from=academy&entry=strategy_practice&redirect=%2Fjournal%2Facademy%2Fstrategies%2Finside_bar_breakout) Example 01 ### Inside bar breakout on a chart EURUSD · H4 Inside bar trend, pause, break Mother bar: 1.0832 to 1.0868Buy stop: 1.0870Stop: 1.0832Target: 1.0946 (2R)Sample candles, not market data The inside bar sat fully within the mother bar during an uptrend. The buy stop above the mother bar filled on the break, with the stop at its low. ### The rules Setup An inside bar: its high is at or below the mother bar's high and its low at or above the mother bar's low, wicks included In a trending market, or at a support or resistance level you marked before Entry Either: a buy stop just above the mother bar (sell stop just below it) Or: a stop order just beyond the inside bar itself, or wait for a candle to close beyond the level Stop The other side of the mother bar, or of the inside bar if you entered on it Target The size of the mother bar, the next support or resistance, or 2R and up Manage Some traders trail the stop once price moves away ### Common mistakes - Not fully inside. A candle that pokes out of the mother bar is not an inside bar. - Trading every one. Inside bars are common. One alone, mid-range, is not enough. - Low timeframes. The sources favour 4 hour and daily charts over 1 and 5 minute ones. - Right before news. A release can break the bar both ways in a minute. ### When it's off - Out at your stop - A break that comes straight back inside the mother bar has failed (the fakey) ### Words to know Inside bar A candle whose high and low both stay inside the previous candle's high and low (the mother bar). A body inside the previous body (a harami) is a different test. Breakout Price moves through a support, resistance or range edge and a candle body closes beyond it. A wick beyond that closes back inside is a sweep, not a breakout. False breakout Price breaks beyond a level but cannot stay there and comes back inside, trapping breakout traders. It is only known after the return, never at the breakout candle's close. Support and resistance Zones, not single prices, where buyers (support) or sellers (resistance) have shown up before. A level is broken when a candle closes beyond it, and a broken level is often watched from the other side. Mother bar The bigger candle that holds the inside bar. Fakey An inside bar break that snaps back inside the mother bar; also called a hikkake. When you make it yours, I'll ask what the rules above leave open. Start with one of these: - Do you place your order beyond the mother bar or the inside bar, and is your stop on the matching side? - What is the trend on the timeframe above, and is the bar at a level you marked before? - What is the lowest timeframe you trade it on? [Ask Edge in DT Terminal](https://www.thedtterminal.com/login?signup=true&from=academy&entry=strategy_question&redirect=%2Fjournal%2Facademy%2Fstrategies%2Finside_bar_breakout) ## From DT Academy - [How to read candlesticks](https://www.thedtterminal.com/academy/how-to-read-candlesticks) - [Market structure](https://www.thedtterminal.com/academy/market-structure) ## What testing exists No independent or academic test of inside bar rules was found. The sources present the pattern as needing context, not as reliable on its own. ## Before you trust a backtest - Many professional traders risk under 1% of their account on one trade idea, and the common guideline is 1 to 2%. - The more versions of a rule you try on the same data, the more likely a good backtest is luck. Decide your rules before you test. - Include spread and commission, and practice on dates you have not looked at, before you trust a result. ## Sources - [Guide to the inside bar trading strategy (opens in a new tab)](https://capital.com/en-int/learn/trading-strategies/inside-bar-trading-strategy), Capital.com - [Hikkake pattern: how to trade the false breakout (opens in a new tab)](https://capital.com/en-gb/learn/technical-analysis/hikkake-pattern), Capital.com - [Inside bar strategy (opens in a new tab)](https://ftmo.oanda.com/blog/inside-bar-strategy-a-simple-yet-powerful-trading-technique-for-all-markets/), FTMO and OANDA - [Price action strategy: a complete guide (opens in a new tab)](https://www.ig.com/uk/learn/trading/price-action-strategy-a-complete-guide-for-traders), IG - [Controlling risk (opens in a new tab)](https://www.ig.com/en/ig-academy/money-management/controlling-risk), IG Academy - [Forex risk management (opens in a new tab)](https://www.cmcmarkets.com/en-gb/forex/forex-risk-management), CMC Markets - [Pseudo-mathematics and financial charlatanism (Notices of the AMS, 2014) (opens in a new tab)](https://scholarworks.wmich.edu/math_pubs/40/), Bailey, Borwein, López de Prado and Zhu - [What is backtesting? (opens in a new tab)](https://www.ig.com/uk/trading-strategies/what-is-backtesting-and-how-do-you-backtest-a-trading-strategy--220426), IG DT Academy is education, not financial advice. Nothing here is a recommendation to buy or sell any instrument. Trading carries a high risk of losing money, and past results, examples and backtests do not guarantee future results. [Risk disclosure](https://www.thedtterminal.com/risk-disclosure) --- Risk disclosure: Futures, forex and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. [Read the full risk disclosure](https://www.thedtterminal.com/legal/risk-disclosure). 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