Making Money Trading

[smbtnt]

Eur/Gbp long

Orders executed at 0.6950 by RBS FX Prop 100 pips stops and 300 pip target.

 

[trader_dante]

Hi T_D,

I just want to clarify your entry point - it seems to me there is that initial inside bar following the breakout, and then there is another inside bar within the initial inside bar... are you putting your entry above the initial inside bar or the most recent inside bar? Thanks for the help =)

Hi Tennis,

The current bar is the current month of November. So I am putting my stop above the first inside bar (October).

 

[PKFFW]

Hey TD,

I missed the pin pictured below as I was sleeping in preparation for a long boring day at work..........it did get me to thinking though.

The red lines are a mix of my daily and 4 hourly S&R lines and as you can see there doesn't seem to be any resistance in sight. In fact the EUR/USD is at it's highest since 1989 which is as far back as my MT4 demo account goes.

So, with no confluence at a resistance line what are your thoughts on trading a pin bar on its own? Would you look to trade it or be waiting for a retrace to the recent break of resistance and look for a pin to indicate resistance is now support?

Cheers,
PKFFW

 

[trader_dante]

Hey TD,

I missed the pin pictured below as I was sleeping in preparation for a long boring day at work..........it did get me to thinking though.

The red lines are a mix of my daily and 4 hourly S&R lines and as you can see there doesn't seem to be any resistance in sight. In fact the EUR/USD is at it's highest since 1989 which is as far back as my MT4 demo account goes.

So, with no confluence at a resistance line what are your thoughts on trading a pin bar on its own? Would you look to trade it or be waiting for a retrace to the recent break of resistance and look for a pin to indicate resistance is now support?

Cheers,
PKFFW

Hi PKFFW,

Well, it really depends on how aggressive a trader you are. Pins are, in my opinion, reliable setups but their reliability INCREASES the higher the timeframe they appear on and the more supporting factors they appear with.

The way I approach it is this:

If I see a pin bar on a lower timeframe (1hr) then I MUST have additional supporting evidence to indicate a move is imminent. If I don't see any, I PASS on the pin.

If I see a pin bar on a daily timeframe that has no supporting evidence in terms of S/R etc, I WILL take it if has ALL of the following:

a) A long "nose". This simply means that there is a significant difference between the high of the pin and the highs of the preceding days.

b) A small body (open/close) compared to the range of the whole bar

c) A close near the low of the days range.

d) A SUBSTANTIAL price advance leading up to the pin.

***** Reverse the appropriate criteria for shorts *****​

 

[Dinos]

Pin Bar DAX Daily & Hourly?

Hi TD

Excellent thread, appears to be a Pin forming on the Dax Daily as I type, on the hourly, huge Pin on the hourly, the right eye is forming positively.

Nose is 7777, bottom 7701, obviously this would be a very large range to place a stop

How would you trade this one

 

[trader_dante]

Hi TD

Excellent thread, appears to be a Pin forming on the Dax Daily as I type, on the hourly, huge Pin on the hourly, the right eye is forming positively.

Nose is 7777, bottom 7701, obviously this would be a very large range to place a stop

How would you trade this one

Dinos,

I personally wouldn't trade this.

I don't have access to 4hr charts for the DAX. This is what I see on the daily and hourly. See charts attached.

Daily:
Looking at JUST the pin without taking into consideration other factors, the body on this is too large compared to the nose. At any rate, it is far too early in the session to place any significance on the current daily bar.

Hourly:
This pin has a long nose but the body is not within the previous bar. For this reason I would not have taken it although as you can see, this didn't stop it being a profitable trade.

Please note: This is just what my charting shows - yours may be different.

 

[Dinos]

Thanks for that TD,

Lets say the body of the pin on the hourly had fallen within the previous bar, and trade was valid, the lenght of the whole pin was approx 76, would you have place such a large stop loss, if not what would determine the setting of the s/l.

Could I also ask, the reason why you feel as the body of the pin was not within the previous bar does not make this a valid trade

cheers

 

[jitasb]

DAX Daily

Dinos,

I personally wouldn't trade this.

I don't have access to 4hr charts for the DAX. This is what I see on the daily and hourly. See charts attached.

Daily:
Looking at JUST the pin without taking into consideration other factors, the body on this is too large compared to the nose. At any rate, it is far too early in the session to place any significance on the current daily bar.

Hourly:
This pin has a long nose but the body is not within the previous bar. For this reason I would not have taken it although as you can see, this didn't stop it being a profitable trade.

Please note: This is just what my charting shows - yours may be different.

Hello TraderD.

Obviously easier in hindsight, but looking at your DAX Daily chart, further to the left of the circled "pin", would you say there is "better" pin on the 28th Sept. It's nose touches the 7750 level acting as support. Further left than this, the 7750 level was resistance. So we now have a S/R pivot point confluence with the pin? And the potential trade could be long on break of the pin upwards ? (Or have I oversimplified this ?)

Apologies, I could have posted a chart with areas circled, but similiar to yourself, a bit tricky at work...text is easier.

Thanks

 

[trader_dante]

Lets say the body of the pin on the hourly had fallen within the previous bar, and trade was valid, the lenght of the whole pin was approx 76, would you have place such a large stop loss, if not what would determine the setting of the s/l.

I wouldn't take a trade on the hourly with a stop loss of 76 points. Principally because its got to move that distance again before I've even got an R:R of 1:1.

However, if the trade looks like it has really good potential then I will look for the same setup that occurred on the Bund (earlier post) where the right eye lines up with the low of the left.

If the market were to put in the low of the right eye BEFORE it triggers the pin, then you could have gone long when it does trigger and put your stop below the eye(s) and cut your risk this way.

The same principle applies on the daily TF. On this higher TF I am comfortable with a large size stop but if it was outside of my comfort zone then I will look to use the right eye to cut the risk.

Could I also ask, the reason why you feel as the body of the pin was not within the previous bar does not make this a valid trade

It only makes the trade invalid for ME because this is the way I was taught. It doesn't necessarily affect the potential profitability of the trade. If you like the pin bar setups you should demo them and see what you feel works and what doesn't.

 

[Dinos]

Thanks TD

Appreciated

 

[trader_dante]

Hello TraderD.

Obviously easier in hindsight, but looking at your DAX Daily chart, further to the left of the circled "pin", would you say there is "better" pin on the 28th Sept. It's nose touches the 7750 level acting as support. Further left than this, the 7750 level was resistance. So we now have a S/R pivot point confluence with the pin? And the potential trade could be long on break of the pin upwards ? (Or have I oversimplified this ?)

Apologies, I could have posted a chart with areas circled, but similiar to yourself, a bit tricky at work...text is easier.

Thanks

Jitasb,

You are 100% correct in your analysis. This pin has a huge deal going for it including the significant S/R pivot you mentioned and the added fact that it makes a two bar high with the preceeding bar. Two bar highs are often good trend continuation setups themselves. (See chart 1)

Having said that I don't like the look of the pin because it doesn't appear at a decent swing low. It's nose extends into the recent congestion zone rather than hanging down into "space" away from other bars. As you can see, despite the fact I didn't like it, once again it worked.

For me though, a much better example would be the pin on the 22 October off the same S/R pivot (chart 2) and if you go back to the 27 June you will see a great pin off the same pivot AGAIN (the pivot is in its infancy here) This pin also comes off fib confluence with the 61 level offering support. (chart 3)

 

[trader_dante]

I am thinking of producing some videos that should help explain what I look for, what makes a good setup and how I would trade it. This should be much more informative than looking at charts. However, I read and edit my posts carefully to make sure that they are as clear and easy to understand as they can be and there is the possibility that if I start talking on a video that it actually may confuse people. I wonder if there is any experienced trader here that would be willing to watch one, if and when I have made it, and give me some feedback/criticism? If you are willing, send me a PM. Thank you!

 

[Splitlink]

For every trader there are points along the journey to consistent profitability when something clicks.

You may see something, read something, overhear something else.

These points come to different traders at different times but I think we've all experienced them.

I had one when I read the following passage, early in my trading career. It had a big effect on me when I read it and I have never forgotten it. I think it has shaped me in an important way and still effects how I think about the markets.

Grab a coffee and have a read. If you've read it before, remind yourself once again what an incredible trade this was:

++++++++++++++++++++++++++

I


I held and held, moving my stop back each day and almost as soon as the loss got so large that I was forced out of the position because I could no longer hold it with the funds in my account, the market turned and went straight back up to $1.9150 or thereabouts.

n 1992 I was in bed with a bad back when the GBP was in crisis and in danger iof leaving the snake.

I listened on the BBC to John Major and Lawson, standing on the steps of somewhere, probably the BoE, and swearing that they would defend the currency, no matter what. They were buying billions of pounds every minute, it seemed to me. I said to myself "Split, why are you in pounds, when you could be in Dm's?"

I wasn't a trader in those days and my cash was in a Guernsey Currency Fund. I got up , phoned and changed my whole balance into marks. I think I did it with two or three hours to spare. If I had been well and working, I would not have been following the news and would have been a poorer man the next day.

Moral. NEVER, EVER, trust your Prime Minister or Chancellor when they say that they will defend the currency. If they have to say a thing like that, there's a very large dead rat around somewhere and the Soros's of the world will start selling. If you can't beat 'em, join 'em!

Sorry I interrupted the thread with that. A great thread. Congratulations

 

[Reas]

Hi TD,

I have made my first profitable trade with youre strategy.
Although.. i don't think you would have entered in this setup.
I'm from Holland and what you see here is the AEX index, hourly base.
This morning i saw a pin that bounced back from a previously drawn support (red line) at 521,xx, and also there was a gap to be filled.
This pin didn't have it's body in the body of the left eye, but i accepted that, and took a little risk.
I entered to soon (trigger hapy) even before the right eye was closed. (took some more risk)
At first the trade went down, but fortunatly i didn't got stopped out.
Later the gap was filled and it brought me a +20% profit.
I think i was lucky this time, but the pin, the support line and the gap, made it worth entering in my opinion.

 

[trader_dante]

I have made my first profitable trade with youre strategy.

Reas,

Congratulations!

I will answer each of your points in turn:

This morning i saw a pin that bounced back from a previously drawn support (red line) at 521,xx, and also there was a gap to be filled.

Thumbs up for drawing the supports in before you trade and the expectation of a gap fill is a fair enough reason to take a position. The first green bar (which I presume is the one you are talking about) is NOT the best looking pin though. Infact I would probably go so far as to say it's not really a pin bar at all. The body looks like it at least half the range of the entire bar! You want to see a small body in comparison to the "nose".

A pin bar is a REVERSAL bar so you want to see a SIGNIFICANT push up/down from the lows/highs of the bar.

This pin didn't have it's body in the body of the left eye, but i accepted that, and took a little risk.

If there is a gap it is likely it won't have its body in the left eye so this is acceptable under the circumstances.

I entered to soon (trigger hapy) even before the right eye was closed. (took some more risk)

It is fine to enter early to cut your risk if that is what you are comfortable with but I personally always try and wait for the break. Remember, the setup is NOT VALID until the high of the pin is broken.

Try testing different strategies and see what works for you.

 

[trader_dante]

Reas,

I see you are using the 10, 21 and 50 EMAs in your chart. Is this because I advised you to take a look at them or is this just a coincidence?

Tom

 

[Reas]

Thanks TD.
About the pin: youre right, i knew it wasn't a very good pin when i entered, but that's a bad habbit I have to get rid off.
Because i only have one day a week that i can follow the market all day, i somehow think i must make some trades during that day.
It is costing me money...
Maybe I should open a forex account somewhere, so i can trade during the evening. (don't think the wife will like that though :cheesy: )

 

[Reas]

TD,

The EMA's are because you advised them
I'm curious what you are doing with them, but I respect it you are taking this thread slowly.
I haven't really looked at them yet, but will do it soon.

 

[trader_dante]

The EMA's are because you advised them
I'm curious what you are doing with them, but I respect it you are taking this thread slowly.
I haven't really looked at them yet, but will do it soon.

Most traders use moving averages in one way or another but I never had much of an affinity to any particular one. From time to time I would put different moving averages or combinations of them on my chart and see where price was trading in relation to them but as far as I remember there was never any consistency in my use of them.

However, last year I was day trading a strategy on 5m bars that was based on my close observation of the market. The essence of the strategy was to wait for momentum in the form of a sharp move up or down and then wait for a natural retracement and take a position. I did this by looking only at the price action itself (relative lows and highs) and did not use anything else to help me define an entry point.

This strategy had an excellent win/loss ratio. Infact when I first started I had a string of consistent wins but it was eventually undone by the fact that my stops were placed too far away from my entry resulting in a losing trade taking the profit that was gained from several winners.

A long time after I abandoned this strategy, I came across a system over on FF that used moving averages to define an entry into the trend after the period of natural retracement.

The premise of the system, which was created by Phil Nel and based on the 5m timeframe, is that when the 50 SMA is sloping at an angle of 20-30 degrees, price will pull back into the zone of the 10 and 21 EMA and it is then that an entry should be taken.

When I read this thread I started looking at these moving averages across all timeframes and saw that time and time again the price would act in the same way whether it was the 5m, the hourly, the four hourly or the daily and upwards.

I have never traded this system mechanically (Nel gives fixed stops and targets) but I have always kept these moving averages on my charts and base a lot of my trades around them. (it is worth noting that I changed the 50 SMA from the original strategy to a 50 EMA)

They are certainly not NECESSARY to trading price action successfully but they really help me personally understand the rhythm of the market.

I have attached a chart of the same market and TF that Raes posted earlier - the AEX index on the 1hr timeframe. It illustrates this rhythm well.

 

[Dinos]

Nice Pin bar Dow 1 hour