Inside Bar Breakout (Nasdaq)

NAS100 · 1H chart · strategy s12_inside_bar · 1 variation

When an hourly Nasdaq candle stays entirely inside the previous one, buys if price then breaks above the bigger candle's high.

What it is about

An 'inside bar' is a candle whose high and low both stay within the previous candle, called the 'mother' candle. It shows a pause: the market has stopped extending and is coiling while buyers and sellers wait.

Pauses tend to end with a move. When price then breaks above the mother candle's high, the pause has resolved upward, and the strategy buys in the hope that the move continues. If the break fails and price falls back through the mother candle's low, the trade is stopped out.

It is one of the classic price-action patterns. On the Nasdaq 100 hourly chart, buys worked; on gold the pattern lost money once the backtest was made realistic.

How it trades

Chart & market

NAS100 (a contract that follows the Nasdaq 100 stock index) on the 1-hour chart. Buys only.

Setup

An inside bar: the candle's high is at or below the previous candle's high, and its low is at or above the previous candle's low.

Entry

During the next hourly candle, a buy stop order (an order that buys automatically if price rises to it) sits at the mother candle's high. It fills at that level, or at the candle's open if price jumped over it.

Stop loss

The mother candle's low. The distance from entry to stop is 1R (R = the amount risked).

Exit

No fixed target. Once the trade is 1R in profit, the stop follows price 1R behind the best price reached (from the next candle, never backwards). The trade is closed after 300 hourly candles at the latest.

Trade management

One trade at a time. If the entry candle also reaches the stop, 5-minute candles are checked to see which came first. When that cannot be told, the trade is counted as stopped out (worst case).

NAS100, nearly around the clock on trading days (the contract trades about 23 hours a day). About 17-18 trades a month. A typical trade lasts about 4 hours; the average is about 13 hours, so some trades stay open overnight.

What to expect

About half the trades win (50%). The average winner is about 1.3R against an average loss of about 1R.
About 17-18 trades a month.
Losing streaks of up to 9 trades in a row in the backtest.
Largest drop from a peak: about 18.7R. Backtest 2019-today at zero cost: +266.1R.
7 of 8 years positive. 2022, a falling year for the Nasdaq, lost about 3.4R.

Risks and caveats

Buys only, on an index that rose for most of the test years. The one falling year (2022) was the one losing year.
The result depends on how the entry candle is judged. Replaying it on 5-minute data gives about +153.4R for 2019-23. Assuming the worst every time, as the TradingView version does, gives clearly less. Finer data might move it either way.
The pattern is easy to backtest wrongly. An early version that skipped candles touching both the entry and the stop showed three times the profit, which was fake. This has been fixed, but it shows how sensitive the numbers are.
Trades can stay open overnight, and overnight financing is not included in the results.
On gold the same rules lost money, so this is a Nasdaq-only strategy.

Where it comes from

A classic price-action pattern, tested in the research of October 2026 on 2019-2023 (the 'train' period) and 2024-2026 (the 'test' period). Its daily results were nearly unrelated to the opening range breakout (+0.04) and the Larry Williams breakout (+0.12).

Main variation: s12-A ★ Main

Live result

−6.9R

10 closed · 0 open · zero cost

Backtest total

+266.1R

1,629 trades · +0.16R a trade · win 50%

Backtest max drawdown

−18.7R

total ÷ drawdown 14.2

Years won

7/8

17.5 trades / month

Backtest R per year (zero cost), s12-A

The variations

Each variation is the same strategy with a different approach, trading its own paper account. Click one to see exactly what it changes.

s12-ABuys, 1R trail (default)★ Main

The only variation so far, running the base rules as described: buys only, stop at the mother candle's low, a 1R trailing stop once +1R, and the entry candle replayed on 5-minute data. A second variation has not been defined yet.

Variations side by side

Live result of all 1 together: −6.9R (zero cost).

			Live paper account (R, zero cost)				Backtest 2018 – today (R, zero cost)

s12-A★ MainInside bar breakout	NAS100	1H	−6.9R	10	20%	–	+266.1R	+0.16R	7/8	17.5	50%	−18.7R

Main = the variation with the most backtest R per R of max drawdown (2018 – today, zero cost). It is picked on that history, so the live accounts are the real test.