Making Money Trading

[forexbee]

Hi Fxbee,

If it were me - I wouldn't class this as a pinbar. To me a pinbar needs to have a small body, so the open/close need to the very near to each other. The other thing I look for is that the open/close of the pinbar are totally contained within the high/low of the previous candle (to the left). On this chart the candle you are looking at does not have these.

However, you are correct in saying that it is bouncing of a level of support/resistance and the long tail suggests that price is rejecting going lower, however I would be looking for the following candle to confirm this reversal move, which it does here with a bullish engulfing candle next. For me, I always look for price to confirm a reversal by closing above the next fib level - so, for instance, if price goes down to the 61.8% fib and is rejected at this level, I look for a positive close above the 50% fib before I would enter.

Hope this helps a bit. I'm sure t_d will have more to add.

Hi Jilly

Thanks for your explanation bit... i will look for pinbar carefully in future...
Though @ 167.73 qualifies for the appearance of like a pin, but the the open & close of this pin is not contained within previous candle high / low (pinbar open is above the previous candle high). I hope i got the point.
Fxbee

 

[forexbee]

This is an EXCELLENT answer. I agree 100%. Thanks Jillyb.

I don't play these quite the same way as Jillyb. If I see a pin bar that looks good, I enter AS it breaks the high of the pin. Jillyb is playing these in the way she is comfortable with which is to say she looks for a more significant confirmation of the reversal.

An agressive trader can play a pin as soon as it has closed and before waiting for a break of the high. I don't see the point of this in most circumstances since a good pin closes at or near to its high/lows anyway. However, in markets that are not quoted 24hr this can work and get you in before a gap up/down (with the inherent risk that the market could also open AGAINST you too)

There are also other ways to play them depending on how conservative you are. Some traders wait for a retracement of the pin so that the stop is much smaller.

The problem with this technique is the pin is not validated UNTIL the high/low of the bar (depending on which way it points) is broken so you are entering before the probability is there that it will work. Also, many pins will not retrace at all meaning you will miss out on a good many moves.

The advantage is that you MINIMISE your risk and MAXIMISE your potential return if it works. I don't do this but IF YOU WANT ME TOO, I will show you HOW it can be done.

One final way is to wait for the right eye to form. Look at the example I posted above. The left and right eye are almost matching. If you see this it can be viewed as ADDED confirmation that the pin is going to be a good one. Again, you don't see this every time and if you wait for it, you may end up missing a move.

There are different ways to play these, this is just how I do it.

Finally - I apologise for so many words and so many images. I can't get images up very easily at work as people can see my screen...words are far less obvious than editing charts

HI TD,

I understand about the open & close of pinbar(signal bar) to be contained in high / low of previous bar. What about the right eye bar...Is there any specific to lookout for it...?
Pls clarify

Fxbee

 

[Fish]

I like to drop little breadcrumbs from time to time. You can pick them up and see if they lead you anywhere.

This morning I was on the bus to work and I read this line in my book:

"If you're going to trade with the trend then the most important step is to find the trend. It's not sufficient to simply intuit that the trend is up or down."

hi t_d,

did this breadcrumb fall off the plate, slip the leash, and then fall through the crack in the floor?

Can you develop the theme of trend a little more? There is much confusion between trend (peaks and troughs) and bias (the direction of the price bars in the last 2 or 3 bars). Say a daily uptrend as shown by peaks and troughs, but current direction or bias is down (you are in the down leg of an uptrend).

And do you find yourself trading counter trend a lot of the time, given that a pin bar is a reversal bar?

 

[trader_dante]

HI TD,

I understand about the open & close of pinbar(signal bar) to be contained in high / low of previous bar. What about the right eye bar...Is there any specific to lookout for it...?
Pls clarify

Fxbee

As I said it depends on how you want to play it. I enter on the right eye IF it breaks the high/low of the pin (in the direction AWAY from the nose).

IF at anytime it breaks ABOVE/BELOW the nose of the pin, it is INVALIDATED and I move on.

You can look for the high/low of the RIGHT EYE to match up with the high/low of the LEFT EYE. This is added confirmation but not necessary to playing these successfully in my opinion.

 

[trader_dante]

hi t_d,

did this breadcrumb fall off the plate, slip the leash, and then fall through the crack in the floor?

Can you develop the theme of trend a little more? There is much confusion between trend (peaks and troughs) and bias (the direction of the price bars in the last 2 or 3 bars). Say a daily uptrend as shown by peaks and troughs, but current direction or bias is down (you are in the down leg of an uptrend).

And do you find yourself trading counter trend a lot of the time, given that a pin bar is a reversal bar?

Although a pin bar is a reversal bar, it can provide a great entry BACK into the trend.

So if the longer term trend is UP and there is a short term down leg, you could wait for a pin bar setup at confluence to get you back into the longer term trend. Have a look at the Eur/Usd charts I posted earlier in this thread.

I sometimes trade counter trend if I get a good signal. I consider a good signal to be one similar to those I posted in my latest chart of the FTSE. These were both counter trend trades that worked well.

P.S. Not every breadcrumb I post will mean something to you. What interested me about that line from the book is that many traders speak about trading WITH the trend as if simply going long when the market is moving UP is enough to make money. You have to FIND the trend. That means that although the market may be moving upwards, you need to find the optimal place to get into that trend. I keep promising it but I am going to show you a moving average system which I hope will:

a) help you find the trend
b) help you stay in trending markets to capture large parts of the move

I will do this soon.

In the meantime, HAPPY HALLOWEEN

 

[rols]

HI TD,

I understand about the open & close of pinbar(signal bar) to be contained in high / low of previous bar. What about the right eye bar...Is there any specific to lookout for it...?
Pls clarify

Fxbee

Please look here

http://www.trade2win.com/boards/showthread.php?p=315201&highlight=pin#post315201

There is a pdf defining Pinocchio bars and a good thread about forex trading which compliments some of the points here.

Also find attached some MQ4 indicators which alert you to pin bars.
http://www.trade2win.com/boards/showthread.php?t=23892&page=3&highlight=pin

 

[fibonelli]

LOL

OK, I consider myself TOLD

No, of course I am not saying that BUT I am still standing by my opinion that the pins THEMSELVES don't look good.

I know some of the newer traders among us still don't understand the pins by some of the posts and PMs I am getting and it is important that they do. If there are many factors, as you state, in a trades favour then it somewhat takes the emphasis off the pin itself but to play it JUST off one or two supporting factors as I am saying can be done, needs a perfect looking pin.

Thank you TD. Sorry if it appeared that I put you on the spot.

I do agree with you that the individual bars weren't perfect but the confluence of supporting factors across multiple timeframes seemed to have made up for the weakness. A 6:1 reward/risk ratio is quite something!!

Great thread!

 

[timsk]

Finally - I apologise for so many words and not many images. I can't get images up very easily at work as people can see my screen...words are far less obvious than editing charts

t_d,
I'm thinking of starting a new thread with a poll for members to guess what your day job is. With the amount of time you're spending here (thank btw - an interesting and enjoyable thread), you must either have a VERY understanding boss or you are the boss. Failing that, I've got you down as a security guard without much to do all day other than to stare at a bunch of monitors where precious little happens of any interest! Sorry for the complete red herring, but I'll wager that other subscribers to your thread have had similar thoughts!

Tim.

 

[jitasb]

Once in a position.

Hi smbtnt,

But smbtnt, look at your chart again. This is what you want to see. A pin bar with a long nose that by virtue of its length shows a FIRM rejection of that previous resistance level on the left and confirms it is now support. This really stands out to me. This is probably because it worked. But I can tell you that if I had seen that I would have almost certainly taken it.

Hello TraderD

Great Thread and I'm currently reading thru it with great interest.

Just going back a bit to your post above (Post number 236) on the DJI 4 Hour chart. Let's say you entered on the break of that pin bar and you are now in the trade. Looking forward where would you have thought about possible resistance and maybe taking partial profits ? For example would you have drawn some pivot lines previously ? And would you have drawn the FIB levels from the pin bar low to the highest high as soon as you entered the trade to help monitor the upcoming price action.

Thanks in advance.

 

[nine]

I recalled looking through James16's thread for good definitions of pin bars and saving some links.

Here they are:

.... ok, TD would prefer to keep the thread clean so I've removed them.

You can find a number of pictures showing James16s approach in the first 4 pages of his thread at:
Jame's Thread

You can find a couple of pdfs defining Pin Bars and an approach to them at:
Introductory and Advanced PDFs

 

[trader_dante]

I recalled looking through James16's thread for good definitions of pin bars and saving some links.

Nine - I appreciate the links. They are good examples but would it be possible to remove them and simply say there are numerous and excellent examples over at J16's thread - which I have maintained throughout already.

I want to differentiate what I am doing and what J16 does. I am showing how I PERSONALLY interpret his (and others) teachings and my own experience of the markets to make money.

Those above charts are great examples of the bars themselves but not great examples of where they appear which is something I am trying to EMPHASISE. The last chart is a 15m bar too!! Not advisable to show this to the new or eager traders among us.

Also - the PDFs have already been posted under the link provided by rols.

Tom

 

[trader_dante]

t_d,
I'm thinking of starting a new thread with a poll for members to guess what your day job is. With the amount of time you're spending here (thank btw - an interesting and enjoyable thread), you must either have a VERY understanding boss or you are the boss. Failing that, I've got you down as a security guard without much to do all day other than to stare at a bunch of monitors where precious little happens of any interest! Sorry for the complete red herring, but I'll wager that other subscribers to your thread have had similar thoughts!

Tim.

I'm a web editor for a group of financial publications.

It is a fairly demanding job and sooner or later, if I post with the frequency I have been, I may lose it.

 

[trader_dante]

Hello TraderD

Great Thread and I'm currently reading thru it with great interest.

Just going back a bit to your post above (Post number 236) on the DJI 4 Hour chart. Let's say you entered on the break of that pin bar and you are now in the trade. Looking forward where would you have thought about possible resistance and maybe taking partial profits ? For example would you have drawn some pivot lines previously ? And would you have drawn the FIB levels from the pin bar low to the highest high as soon as you entered the trade to help monitor the upcoming price action.

Thanks in advance.

The problem with talking about where I WOULD have thought about taking profit is that its easy to say when you can see where price did actually stall.

At the risk of opening myself up to cries of "hindsight is 20/20 vision" - I would have drawn the fibs as you have on your chart BEFORE I GOT IN and marked off a clear S/R line which I think corresponds very well with the 61 fib. This is where I would have been looking to target and is, infact, where the price has turned.

HOWEVER, there is some volatile movement and I think in all likelihood I would have been taken out at BE which is where I would probably have moved my stop when this was clear in profit as it would have been 2 candles after the entry candle.

IF I had survived that, the next pin (count seven in from the first) would have taken me out.

I will tell you all now: I give A LOT of money back to the market in terms of being in profit and then being taken out for break even.

But I make MUCH MORE than I give back by playing this way because when I have a good entry and the price takes off without looking back, you can find yourself at the beginning of MAJOR moves that boast incredible R:R.

 

[Dinos]

TD, exellent thread, have throughtly enjoyed it, FW mentioned the CAC as an indices to trade, I do trade the CAC, however not using the methods you state, will be intresting to see the comparison of trading styles and eventual profitability

Keep up the good work

 

[redart007]

I'm a web editor for a group of financial publications.

It is a fairly demanding job and sooner or later, if I post with the frequency I have been, I may lose it.

Hey TD,

Firstly thanks for the thread, it great, I thought you might be an Engineer...;-)

Dont loose your job...Their is lots and lots here for people to review and test in the meantime... so take some time too catch up on your work, then come back at the weekend or whenever you can enjoy helping - without the worry...

All the best

Red

(thinks 'hold on a minute, I've got stack loads to catch up, better take some of that advice!)

 

[trader_dante]

Ftse

When I go through the markets each night and I see a situation like this developing, it goes straight into my portfolio to watch closely.

This market is now coming up for a fourth test of that top.

I am not willing to call WHEN that market will take the top out but I AM willing to say that I am almost certain that at some point after it does, it will be re-tested from above. Time and time again you will see this happen. Resistance will become support.

We have already identified many situations where this has happened across all different timeframes.

An optimal entry would be a price action setup like a pin bar that confirms that this level is now acting as a support to prices.

Sometimes you can get this on the hourly timeframe on the day it goes through. More often than not you need the patience to wait for a retest on the daily TF.

 

[forexbee]

When I go through the markets each night and I see a situation like this developing, it goes straight into my portfolio to watch closely.

This market is now coming up for a fourth test of that top.


Sometimes you can get this on the hourly timeframe on the day it goes through. More often than not you need the patience to wait for a retest on the daily TF.

Hi TD,

Good morning,

I saw one pinbar formation in your ftse chart, first swing high around 15-Jun , does that qualify for the pinbar... ?

Fxbee

 

[trader_dante]

Hi TD,

Good morning,

I saw one pinbar formation in your ftse chart, first swing high around 15-Jun , does that qualify for the pinbar... ?

Fxbee

Yes it certainly does. I have already mentioned this particular bar in an earlier post. It could have been played with negative divergence on the RSI (a popular indicator) for a high probability short setup.

 

[Reas]

Hello T_D,

This is my first post on this forum, i've been reading youre thread and it's one of the best i've ever read.
I've been an active trader for half a year now, and sofar have payed some learning money.
I'm sure youre trading tips will help me make better trades.
Thanks for showing us your way of trading.

greetings,
reas

 

[trader_dante]

Hello T_D,

This is my first post on this forum, i've been reading youre thread and it's one of the best i've ever read.
I've been an active trader for half a year now, and sofar have payed some learning money.
I'm sure youre trading tips will help me make better trades.
Thanks for showing us your way of trading.

greetings,
reas

Hi Reas,

Every single one of us reading this has paid a tuition fee to the markets. Some have paid more than others.

Students these days pay thousands to get a qualification or a skill and have the ADDED problem that in most cases they will rely on another to employ them which can make finding work difficult.

The same will happen to many traders. They may pay out a lot of money and realise they still can't make a living trading but the one ADVANTAGE we have over others is that we do not need to rely on anyone else. A trader is studying to become financially INDEPENDENT.