MajorDutch
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I have been studying pin bars for some time now and have refined what I call a 'perfect pin'. Clearly the form of the pin is only one factor in deciding whether to trade.
the rules for the perfect pins are:
EDITED 8.11.2011 from discussion points.
1. body of pin must be 1/3rd or less than the entire length
2. tail must be minimal or non existent
3. body must me in top(or bottom) 1/3rd of bar
4. for bullish setup close must be above or equal to open (for bearish vice versa)
5. the open and close must be within the left 'eye' of previous bar
Dutch's additional optional rules
6. only take a pin where price breaks the top(or bottom) of the pin within the next bar otherwise wait for the next one (it wont be long)
7. only take a pin where it is at a clear swing high or low. i.e. it's nose is sticking way out.
If you only take these bars at swing highs/swing lows the reliability of these pins on say a 1:1R basis is quite astonishing even on lower t/f's. This is without adding in any further confluence such as S/R, TL's, Round numbers, Pivots, Fibs, MAs.
but warning patience is needed as you will have you will have to pass on many many 'pin bars' which don't fit the perfect pin bar rules.
the rules for the perfect pins are:
EDITED 8.11.2011 from discussion points.
1. body of pin must be 1/3rd or less than the entire length
2. tail must be minimal or non existent
3. body must me in top(or bottom) 1/3rd of bar
4. for bullish setup close must be above or equal to open (for bearish vice versa)
5. the open and close must be within the left 'eye' of previous bar
Dutch's additional optional rules
6. only take a pin where price breaks the top(or bottom) of the pin within the next bar otherwise wait for the next one (it wont be long)
7. only take a pin where it is at a clear swing high or low. i.e. it's nose is sticking way out.
If you only take these bars at swing highs/swing lows the reliability of these pins on say a 1:1R basis is quite astonishing even on lower t/f's. This is without adding in any further confluence such as S/R, TL's, Round numbers, Pivots, Fibs, MAs.
but warning patience is needed as you will have you will have to pass on many many 'pin bars' which don't fit the perfect pin bar rules.
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