Making Money Trading

[forexbee]

Hi TD, Fibo

Can pinbar occur next to next...i mean from your chart around Nov07 just 6 candles before two candles marked for pinbar....Is it possible to have pinbar signal like that? If so is that a valid signal?

Fxbee

 

[lurkerlurker]

Hi Fxbee, as stated above, whether the body is bullish/bearish doesn't affect my decision in taking the trade.

To clarify, that would be because the important factors in a pin bar are

1. A break out from the recent range (nose pokes out from the recent range)
2. Little difference between the open and close (small body)
3. A wide range (long "nose" or "tail" in comparison to the body)
4. A sharp intra day reversal (for daily pins)

Whether the close is slightly higher or slightly lower than the open shouldn't weigh as much as the above factors.

TD - when taking daily signals in currencies which are trending, are your pips improved by only taking signals in the direction of the trend (or are catching the counter trend tops/bottoms too important to your P&L)?

 

[PKFFW]

Hi TD,

Firstly, great thread you have going here. I've had a look at the J16 thread over at FF and frankly have always found it hard going trying to get through it. It's good to have your thoughts and take on it clearly laid out.

I did have one question.....does the confirmation of the pin bar signal by breaking the high/low of the pin bar have to occur within the next bar for valid confirmation?

Looking at my charts I see a number of times where a pin bar forms but the signal is not validated by breaking the high/low until 2 or 3 bars later. Would that still be considered a valid signal? Assuming it is not invalidated by subsequent trading at higher or lower prices than the direction of the pin nose if that makes sense.

Cheers,
PKFFW

 

[trader_dante]

To clarify, that would be because the important factors in a pin bar are

1. A break out from the recent range (nose pokes out from the recent range)
2. Little difference between the open and close (small body)
3. A wide range (long "nose" or "tail" in comparison to the body)
4. A sharp intra day reversal (for daily pins)

Whether the close is slightly higher or slightly lower than the open shouldn't weigh as much as the above factors.

TD - when taking daily signals in currencies which are trending, are your pips improved by only taking signals in the direction of the trend (or are catching the counter trend tops/bottoms too important to your P&L)?

I trade both WITH and AGAINST the trend and also in sideways ranges where there is LITTLE or NO trend.

My single biggest win has been trading countertrend but I wouldn't say my pips have been consistently improved by taking any one particular stance.

 

[trader_dante]

Hi TD,

Firstly, great thread you have going here. I've had a look at the J16 thread over at FF and frankly have always found it hard going trying to get through it. It's good to have your thoughts and take on it clearly laid out.

I did have one question.....does the confirmation of the pin bar signal by breaking the high/low of the pin bar have to occur within the next bar for valid confirmation?

Looking at my charts I see a number of times where a pin bar forms but the signal is not validated by breaking the high/low until 2 or 3 bars later. Would that still be considered a valid signal? Assuming it is not invalidated by subsequent trading at higher or lower prices than the direction of the pin nose if that makes sense.

Cheers,
PKFFW

Hi PKFFW,

I am very glad you asked that question.

The answer is down to the individual trader but since this is about the way I play the bars, I will tell you what I do.

I like to see the pin bar break on the subsequent bar. If it doesn't, I may still take it but I want to see what the successive bars look like.

Let me give you an example from an actual position I was recently looking at taking in the Bund. This will show you some of my thinking when I look at a potential opportunity. I'll show you the setup and my reaction as the market moved, over the next few posts.

The setup I saw was this one hour pin bar that almost touched the 61 fib from the swing low (just out of sight on this chart) to the swing high. So I put a long order in at £4 just one tick above the high of the pin bar and put my corresponding stop just one tick below the low of the pin.

 

[trader_dante]

The next candle didn't trigger my long but instead it formed an inside bar.

This inside bar was particularly interesting because the high of both itself and the pin bar were equal to the tick. So I would expect a break up through this level to have even more force because you've got a pin bar and an inside bar forming a TWO BAR HIGH.

Now the low of that inside bar was also EXACTLY equal to the low of the left eye (the bar to the immediate left of the pin) showing good support.

So, at this point, I increased my long order from £4 a tick up to £5 a tick but MOVED my stop up on the order (if it was to be filled) to just a tick below the inside bar which gave me INCREASED size at LESS risk.

 

[trader_dante]

The next candle broke this low and on its close the market looked to me to have a much more bearish tone.

As a result, even though the pin had not been invalidated, I pulled my order out of the market.

Guess what happened next...

 

[trader_dante]

This was frustrating but I never chase a market so I sat back and watched it take off without me and decided after that the best course of action was to stop looking at the charts for the day.

In a situation like this it is not uncommon to feel "cheated" and look for other opportunities that will give you what you feel the market now "owes" you.

PKFFW - To summarise: Normally I want to see my order triggered on the next bar - if I don't, I will pull the order unless the market gives me reason to think it is getting ready to follow through in the direction I anticipated. If you miss a setup, let it go.

 

[innovation]

Hi TD,

This is my 1st post here although I have been a member of the suite for a while.

I have been watching this thread with interest and have found you points on psychological forces involved in trading very insightful, thank you. Books always tend to gloss over this apsect.

My question for you is:

How do you deal with setting targets when the instrument is making new highs? Take Gold, I got out yesterday @ 825 as I felt that it was due for a correction and the doji day before made me uneasy. Low and behold it carried on untill 848! With no S&R or fib to evaluate how would you set a target?

Thanks and keep up the good work!

Matt

 

[lurkerlurker]

This was frustrating but I never chase a market so I sat back and watched it take off without me and decided after that the best course of action was to stop looking at the charts for the day.

Sounds like a good course of action, however I do wonder why you didn't take the long when the fourth bar was formed (ie the green candle which closed at the top of the first pin bar - that gives 3/4 bars with the same high).

 

[rathcoole_exile]

How do you deal with setting targets when the instrument is making new highs? Take Gold, I got out yesterday @ 825 as I felt that it was due for a correction and the doji day before made me uneasy. Low and behold it carried on untill 848! With no S&R or fib to evaluate how would you set a target?

easy. get out at 1,000

 

[trader_dante]

Hi TD,

This is my 1st post here although I have been a member of the suite for a while.

I have been watching this thread with interest and have found you points on psychological forces involved in trading very insightful, thank you. Books always tend to gloss over this apsect.

My question for you is:

How do you deal with setting targets when the instrument is making new highs? Take Gold, I got out yesterday @ 825 as I felt that it was due for a correction and the doji day before made me uneasy. Low and behold it carried on untill 848! With no S&R or fib to evaluate how would you set a target?

Thanks and keep up the good work!

Matt

Matt,

You are FEELING and not REACTING.

If you think that a market is "due for a correction" because it's travelled too far, too fast, then you need to familiarise yourself with serious bull or bear markets. This type of thinking can be very, very costly.

A doji is a sign of indecision but it frequently appears at periods of consolidation. If you were convinced the doji signalled a turning point however, you could have put your stop just beneath it and let the market CONFIRM your viewpoint. That way you would still have been in this move now.

I personally would not even attempt to set a target when a market is making new highs. $850 will hold some weight as it is the all time high but I certainly wouldn't use this as a reason to exit.

If you have a good entry in a runaway bull market like this then your single biggest concern should be holding onto your position.

To catch a very large move you often need to place your stop a reasonable distance from the price at a point where the market has proved you are WRONG based on the reasons for your entry criteria. This often means you will give back a significant part of your profit but I think you have to be prepared to give to receive.

 

[trader_dante]

Sounds like a good course of action, however I do wonder why you didn't take the long when the fourth bar was formed (ie the green candle which closed at the top of the first pin bar - that gives 3/4 bars with the same high).

Good point Lurker and a simple reason that comes down to psychology.

By the third bar I felt the market had a bearish tone. I have just talked in my previous post about the importance of NOT feeling but in this case my feeling was somewhat confirmed by the price action.

I felt that if the market was strong, the support from the left and right eye should have held and the price should have moved up. When it didn't I had no confidence that there would be a profitable move.

The fact that the market regained ground and closed at the highs of the first two bars in the setup was a positive sign but I never trade when I am not 100% confident. I take more risk than the average trader and everything has to be just right.

IF I pass on the trade, the worst that could happen is some frustration at a missed opportunity in a market that will present many others in the future.

IF the trade had been taken and had turned into a loss I would have been angry at myself for taking a trade I no longer had confidence in.

Both scenarios create an emotional response that needs to be dealt with but there is an important difference between the two occurences: in the first one, I haven't actually LOST anything.

 

[fibonelli]

Hi Matt,

I'm currently backtesting and also looking at various exit methods.

In terms of setting price objectives consider:
1. Key support and resistance pivots
2. Big round numbers;
3. The 127.2% & 161.8% Fibonacci extension of a prior swing;
4. Daily/Weekly Pivots and Daily/Weekly Fibs;

If you want the chart to give you clues then:
1. Candlestick Analysis ie wait for a reversal candle and/or an indecision candle
2. Chart Pattern failure
3. Oscillator and Band Divergence
4. Extreme Oscillator Readings

Admittedly, in a parabolic move, you could easily sell too early.

Therefore, I personally like the idea of partially scaling out at pre-determined levels and then let the market tell me to exit the final portion.

Stops in the safe area where you know the reason for the trade is no longer valid.

HTH

 

[lurkerlurker]

IF I pass on the trade, the worst that could happen is some frustration at a missed opportunity in a market that will present many others in the future.

IF the trade had been taken and had turned into a loss I would have been angry at myself for taking a trade I no longer had confidence in.

Amazing attitude and discipline. Never chase the market. I think this thread should be required reading for those new to this (and those of us who are no longer new but let our discipline slide from time to time!!!)

 

[lurkerlurker]

Short AUD/CAD from 8572 with stop of 8620 and target of 8500 or lower based on an hourly pin bar at resistance.

 

[trader_dante]

Short AUD/CAD from 8572 with stop of 8620 and target of 8500 or lower based on an hourly pin bar at resistance.

Lurker, look at the daily on this pair you just shorted. The price has bounced at the 61 fib which coincides with the bottom of the range in this market.

 

[forexbee]

Short AUD/CAD from 8572 with stop of 8620 and target of 8500 or lower based on an hourly pin bar at resistance.

Hi Lurkerlurker

Wow, thats really a very nice pinbar, just saw the chart after reading your post ni 1Hr timeframe....simply Thanks a lot on pointing it...



@TD, Hi TD how was the getogether yday in london....! iam a bit struck in my work in guildford, possibly in two months i might move for my job to london...Will try to meet you guys in next getogether....

Fxbee

 

[lurkerlurker]

Lurker, look at the daily on this pair you just shorted. The price has bounced at the 61 fib which coincides with the bottom of the range in this market.

Yeah, and because of that I'll be doubly certain to cut my losses on the break of the high. Not looking to be a great trade - down about 20 pips so far including spread.

It is a bit of a speculative trade, but I'm still learning here. We can't predict the outcome every time. As Douglas says, we just need to be aware we have an edge for a sufficient number of trades, and forget the outcome of each individual one.

On a MM point, I'm prepared to pay the £25 to find out if I was right or wrong in taking this trade. If I'm wrong, I'll just wait for the next signal. I feel okay with this risk too since I'm already up on the day and week.

I might be heading for my first profitable week in about a month, so watch this space.

Current hourly bar has just closed. A lower low and lower high on the hourly TF. Retraced a bit of the move, but that is to be expected. Holding into EOD - perhaps roll it over depending.

Stops are in, emotions are out!

 

[trader_dante]

I'm prepared to pay the £25 to find out if I was right or wrong in taking this trade.

Lurker this is a really great post - I especially like this sentence.