Pin Bars on the Weekly charts of Equities

[1RISH]

Hey guys, i've been lurking around and reading around the forums for quite some time now. I am not trading any real money yet, so the plan is to sim trade until my analysis improves and consistency in picking winning trades.

I have chosen to focus on just one setup, the pin bar. I am sure this needs no introduction, as it's a very widely used pattern.

I have also chosen to focus on the stock market. Having spent some time with forex, I find that , even taking into account all the majors and crosses, you maybe have 40-50 pairs to scan for setups. Compare that to 3000+ on the US stock markets and, in my opinion, that gives me the benefit of choice.

Every Sunday I plot key levels on charts and wait for pin bars to form. Trades have the following assessment criteria:

Bar size: The pin bar must be big enough to signal a genuine and strong enough reversal, but also not so big that the majority of the reversal is contained within the bar.

Confluence: Pin bars must form off key levels, preferably where multiple strong support and resistance levels merge together.

Space: Pin bars must not be too close to areas of congestion or 'traffic'.

The overall structure of the market: In other words, does the trade actually make sense? Am I taking a pin bar off support in no man's land? or am I trading within a well defined trend or pattern.


That's it so far. I will detail my trade management once I find a setup worth taking. One last thing to point out is that since stocks gap quite a lot, I have chosen the weekly charts to smoothen out the price action and so gaps have less of an effect.

I will keep a running total of my % win/loss, as I will 'risk' 1-2% per trade, based on how good I think the setup is.

:clover:

 

[1RISH]

Trade number one:
Long BNCL based on the breakout and retest of resistance, with a clean, well defined pin bar.

I will assume entry , rather than where it is now, is the close of the pin bar (14.75), stop loss is 2 ticks below the pin bar (14.02). The target is 15.60 (just over 1R). This setup is quite unique given we are at all time highs on this stock, and so it's hard to have a logical exit point, so just over 1R will suffice.

The first trouble area is the swing high at 15.13, I will watch how price reacts to this level. For example if we trade above and close below, (a weekly candle close) I will close the trade regardless. If we close above, I will trail my stop higher, should that happen.

Chart attached.

 

[tomorton]

Nice. Objective, rational, TA-based and not too simplistic.

The example trade is a break-out so difficult to set exit conditions - how long would you give this if price doesn't accelerate upwards?

I prefer trend-following, though pin bars can neatly signal a trend-resumption. I've never seen it logged if break-out pin bars are better signals than trend-resumption pin bars - would you consider tracking such a context to work this out?

 

[1RISH]

Nice. Objective, rational, TA-based and not too simplistic.

The example trade is a break-out so difficult to set exit conditions - how long would you give this if price doesn't accelerate upwards?

I prefer trend-following, though pin bars can neatly signal a trend-resumption. I've never seen it logged if break-out pin bars are better signals than trend-resumption pin bars - would you consider tracking such a context to work this out?

Hey thanks for posting . I don't necessarily have a time stop on a trade like this , it's more about how it tests that resistance and closes above it or not , or of an obvious bear candle forms on the way there , I'll close it .

I do have a few things I'm testing at the moment , like you said . For the time being though I'm just looking for consistently picking obvious winning setups

 

[1RISH]

This is the kind of setup I'm trying to find , I don't care if it takes a month for it to form (a past setup on VRSN) . Nice trend , clean but deep pullback right to a s/r pivot with a huge hammer (almost a pin bar, but I think you can give a bit of leeway with setups like this ) and most importantly , no traffic or resistance nearby :

 

[tomorton]

Nice set-up. Entry signals are important of course, they're the starting point for the specific trade, while stops keep you in the game, but its exits that make the money.

What're your rules for exits/stops?

 

[tomorton]

I should already have said 1RISH you get another point from me for a simple approach. There's no rule that says the most complex system gets the most money.

 

[1RISH]

Nice set-up. Entry signals are important of course, they're the starting point for the specific trade, while stops keep you in the game, but its exits that make the money.

What're your rules for exits/stops?

It depends on the setup.
For stop losses: if the pin bar has bounced 'off' a level without really piercing it much, a hard stop 2 ticks below the pin is used.

If the pin bar pierces a s/r level significantly, I will still place a hard stop below the pin bar but will close the trade if a weekly bar closes under the s/r level which the pin has poked through, if that makes sense!

Targets have a similar dynamic, I usually try and target the most recent swing high (if going long), but usually a little bit under the high (don't be a dick for a tick lol). Along the way to the 'ideal' target I will also close the trade if price tests resistance/traffic along the way and closes against me; and trail stops higher if we close above levels.

For example, with only a couple hours left until the weekly close, it looks like BNCL isn't taking off soon , printing a big fat bearish hammer. It didn't quite test the recent swing high, but zooming in on the dailies there is definitely some resistance which price failed to close over. As a result, i'm exiting this trade for a 25 tick loss (-.36R)

Every time I face a loss I have to ask myself whether the loss was because of a bad trade setup (was there something that could have been done better? was it not an A+ setup? Or whether it's really just a result of probabilities
In the case of this setup, looking in hindsight the pullback to support wasn't that deep, it was a little spikey and left some traffic. Where the pin bar formed was , in my opinion, an excellent pivot area. However, I should have considered the close-by swing high more seriously.

Onwards and upwards . I really want to find excruciatingly obvious setups, I don't care if it takes a months wait. I just flicked through over 1000 stock charts and nothing is really catching my eye this week.

 

[Cigar]

Hope this helps.

The software is Wordens TC2000.

 

[1RISH]

Hope this helps.

Wow what software are you using to scan for pinbars?

Personally the pin is pretty good there , but it needed to close above the s/r flip , it closed just underneath that. Also the pin is off a minor and rather loose support level , though it does have good volume !

 

[barjon]

Hi 1rish

Thought I'd chime in since I've been doing something similar for donkeys years with my 3+bar retracement stuff which is my main bag. You may be interested to know that I go double position when the final bar in the retracement is a pinbar (hammer or shooting star) type.

What I do is broadly explained in part of this - http://www.trade2win.com/articles/2006-trading-business and the ideal that I look for (which rarely comes) is in the thumbnail.

hope it goes well for you

 

[1RISH]

Just finished my weekly stock scan and nothing set up at the moment!

I do hope to scrape some money and open a small finspreads account with small risk (£400) and slowly add to it. I haven't mentioned that I'm a 22 year old student , though I'm due to start a training contract with a big 4 accounting firm this coming September

 

[barjon]

Just finished my weekly stock scan and nothing set up at the moment!

I do hope to scrape some money and open a small finspreads account with small risk (£400) and slowly add to it. I haven't mentioned that I'm a 22 year old student , though I'm due to start a training contract with a big 4 accounting firm this coming September

Keep it small, there's no rush

 

[1RISH]

Depends how we close out this week but some stocks are looking nice at the moment- particularly utilities. Let's see how we look on friday

 

[1RISH]

Taking a short setup on VLO: retest of broken trendline and $60 round number. Target is 52.23, stop 61.64

 

[1RISH]

And one other trade I am entering short: KR, nice retest of a s/r flip, and the pin bar also coincides with a false breakout of multiple inside bars. Target is 29.02, stop loss is 32.50. Entry will be on the bid at 30.92 (will only assume entry if we trade 30.93).

 

[1RISH]

Ouch! -1.36R overall after the election!

 

[1RISH]

Stopped out on the second of these trades .

-2.36R

3 trades,3 losses 👍

 

[1RISH]

Was away in Reykjavik this weekend so I'll have a look at charts tomorrow and see if anything has setup for a later entry

 

[Cigar]

Only one for you this weekend (weekly / 5 day scan) GPN