perfect pin bars

[bbmac]

It is good to have rules for any trading set-up even if that set-up is just one candle, - and your 1-5 rule set is a good one.

The gbpusd 5min screenshot you posted looks slightly different on my alpari Uk feed - MT4 (don't know what feed you have there ?) but that doesn't matter as you can only trade the candles in front of you. I have noticed like others that on 5min and below there can be these little differences in candle formations and these are greater on the lower t/f's.

In respect of entering a trade on the close of a 'perfect' PB would you enter on the open of the new/next candle only if the new candle opens equal or higher (bullish PB) / lower (bearish PB) ? than the close of the PB ? [Ie I have noticed that the longer the wick of the PB relative to the body the greater the chance of a pullback before there is a follow thru on the preferred direction of price as may be being indicated by the PB.]

Ie if the new candle opens lower than the close of the previous bullish PB/higher than the close of the bearish PB would you wait for the that candle to exceed the close before entering even if it is mid-candle ie not closed or wait for that whole 'next' candle to close ?

Thanks

G/L

 

[MajorDutch]

It is good to have rules for any trading set-up even if that set-up is just one candle, - and your 1-5 rule set is a good one.

The gbpusd 5min screenshot you posted looks slightly different on my alpari Uk feed - MT4 (don't know what feed you have there ?) but that doesn't matter as you can only trade the candles in front of you. I have noticed like others that on 5min and below there can be these little differences in candle formations and these are greater on the lower t/f's.

In respect of entering a trade on the close of a 'perfect' PB would you enter on the open of the new/next candle only if the new candle opens equal or higher (bullish PB) / lower (bearish PB) ? thatn the cloxse of the PB ? [Ie I have noticed that the longer the wick of the PB relative to the body the greater the chance of a pullback before there is a follow thru on the preferred direction of price as may be being indicated by the PB.]
ie if the new candle opens lower than the close of the previous bullish PB/higher than the close of the bearish PB would you wait for the that candle to exceed the close before entering even if it is mid-candle ie not closed or wait for that whole 'next' candle to close ?

Thanks

G/L

Hi BBmac

So far I havn't taken any perfect pins on their own, I have always looked for further confluence from MA,TL, Pivot, Fib, round numbers. The feed I use for charting is smart live markets now called GKFX, i just use this for MT4 charting and for exotic pairs most of my execution is through IG but I find their charting pants.

for entries personally I only enter on a break of the top of the pin bar (tail and all), so for the longer t/f's I am able to place a stop order to open above the top/bottom of the pin. think this answers your question.

i just eyeballed EURUSD 5min chart from 8am today, I could only see one perfect pin and that went on to make several R, there was another one @16.05 however it didnt trigger in the next bar for me so was a no trade.

I know of several pin bar indicators however I wish some clever bod could program one to these perfect pin rules and do some back testing. Of course how much the pin sticks out, if it is a swing high/low are discretionary elements.

 

[dazzer_fx]

Essentially a pin is a sharp rejection of a certain area. The form of the pin
isn't just down to its content but also how the content fitted within the start
and the end of that pin.

There are other types of price rejection that show as a different form on the
chart, in effect these patterns are exactly same but over a different
period of time. In effect one man's pin on a 15min bar is another man's BEOB
(bearish engulfing over bar) on a 30min bar. Example attached. To concentrate
on pins alone is not experiencing price action as content but as form alone.

But most importantly and IMHO this type of trading is much more consistent
on higher time frames (4hrs and above), it is for me anyway.

 

[Splitlink]

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:

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

and here is the rule that knocks many bars out:

4. for bullish setup close must be above or equal to open (for bearish vice versa)

and here is the final crucial rule that knocks out many more:

5. the body of the pin bar must be 'within' the range of the body of the previous bar. note normally the close of the previous bar is equal to the open of the current bar unless price has gapped.

rule 5 is crucial as without this condition being met what we are actually seeing is price failing to close above the previous close for a bullish set up (bearish vice versa) and this is essentially a breakout.

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.

They are very good rules. I'll try them out as I am a follower of pin bars. but I use them when I "like" them. They have to be, for instance, in oversold/bought territory or in a trending market so that the pin is, really, the beginning of a thrust in the direction of the main trend.

 

[pboyles]

They are very good rules. I'll try them out as I am a follower of pin bars. but I use them when I "like" them. They have to be, for instance, in oversold territory preferibly in a trending market so that the pin is, really, the beginning of a thrust in the direction of the main trend.

Definitely need some discretion added in. They are very simple rules to code but if you code them and run a backrest you'll be disappointed I think, that's where you own judgment has to come in.

 

[barryb]

hi PB, this is great vendor free trading discussion!

I normally have the 150 and 365 ma's up a.k.a. James16. I will certainly now eyeball a few 15min charts with the 50/100 MA's.

Are you sure...?? You're sounding more like a vendor everyday on here.

 

[MajorDutch]

Are you sure...?? You're sounding more like a vendor everyday on here.

yeah trading isn't as easy as I thought and I seem to lose more than I win. I have worked out that if I charge 100 people £50 per month I will net £5000 every month. It doesn't matter if what i teach doesn't work as people are too dumb to realise you see I just teach a method. I have drawn up a load of fake testimonials. Some people will gamble away their rent money but ***k them , if they are too dumb they deserve to lose the money. after all what I am doing is not illegal. gotcha

dont worry barry boy I wont be turning to the dark side of the force.

believe it or not I have morals and like to sleep soundly at night.

 

[MajorDutch]

only 1 perfect pin on cable this morning on the 5m.

 

[dazzer_fx]

only 1 perfect pin on cable this morning on the 5m.

smack on a 62 fib as well

 

[bbmac]

although may not have been perfect re rules 1-5 yopu outlined although b. looked like it was ? a and c had a lot going for them re other confluence and as PB's themselves (?)

b. looked pretty perfect re rule 1-5 ?
a. was a bearish body and close below the previous candle close
c. an open and close above the previous candle close and bullish body.

G/L

only 1 perfect pin on cable this morning on the 5m.

 

[MajorDutch]

Hi matey

candle b - my feed is slightly different the body was slightly outside the previous body, also price didn't break the bottom of the pin on the next candle.

candle a - yeah i didnt label this one as it didnt stick out enough, it was almost at a matching high.

candle c - great looking candle but body is not within previous body but open and close are within the 'left eye'

the problem with this candle form analysis is that slight variations from the rules normally go on to make pips as well.

I think rule 5 needs to be modified to the following. I have also added rule 6 & 7 on how I trade.

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 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.

note this is before any analysis of the complete picture of price, TL's, S/R, long MA's, fibs, pivots and round numbers.

 

[Splitlink]

Hey Dutch,

the bar is the least part of the set up.

Especially, on 5 min bars. In fact, I do not think that you can come to any conclusions with them on that TF, without completing a set-up of some kind. Pinbars, even on 60Mins can result in no change of trend,at all, but merely a continuance of the existing one, as I found out in my first experiments with them.

 

[MajorDutch]

Hey Stronzo

all constructive comments welcome mate. I have been trading for 3 years, I am definitely still in the beginner camp. I have had some success on the higher t/f's Daily's & 4H's however I have yet to master lower t/f's I just find them brutal. So all my studies into the lower t/f 1m, 3m, 5m, 10m, 15m, 30m, 1hr are just that, studies to try and get profitable.

You are spot on about the bar size, so another rule needs to be added - dunno if you can think of a suitable one. I can see where you are coming from, if you get a small pin right after a huge thrusting bar for me that is not prime.

agreed on the form of the bar being just one part however you still see some great reliability with the bars with perfect form, The form can also be measured systematically as a lot of the other big picture factors are discretionary.

Hey Dutch,

I don't know how experienced you are, so I hope this doesn't come ac

ross as patronising, but the direction you are taking is excellent.

The things that you're looking at can dramatically improve your results, although I would imagine most people are too dim to understand why (and too lazy to spend any time trying to work it out).

By adopting this approach you're harnessing the key advantage of the retail trader.

One other I would suggest you look at and that is size. Although I like all the "pin bar form" filters you've decided to apply, I actually think size trumps all of them.

One final thing that I would suggest (although it looks like you might be coming to this conclusion anyway): the bar is the least part of the set up.

Anyway, great stuff you've posted. Best of luck with your trading.

 

[Tradingkid09]

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.

Some pretty good points here, but I personally don't limit myself to only pins with the close in my favor in trending markets. Meaning, in a strong bullish trending market it's not necessarily a problem if the close is not bullish. I do like to see the close in my favor, but in obvious trends I will make exceptions sometimes. This is why I think it's difficult to try and put price action trading into a rule-set. It is more of a discretionary art form.

 

[pboyles]

What about this PIN with the trend, pretty good set up.

 

[MajorDutch]

What about this PIN with the trend, pretty good set up.

looks good matey. what confluence do you go in for?

 

[pboyles]

looks good matey. what confluence do you go in for?

Just the trend but I look for warning signs like upcoming S&R or divergence that indicates the trend may be coming to an end. I also watch for news events and in fact I often trade the news regardless of price action so long as it is far enough out of line with expectations.

 

[cmmichaels]

Did anyone who trades this way take some money from this pin on the bund, they don't really come much better than this. Not a pivot point but triple top so still v.good set up contained in the left eye, swing point, etc...

 

[Splitlink]

I would have taken pboyles, if I had been tracking that chart, because I follow trends. cmm's, I'm afraid did not convince.

 

[cmmichaels]

I can see the issues with the pin but i think traded correctly there was some money to be made move tye stop quickly it's straight into a problem area and there is not a lot of space around the pin but due to the triple top price action around that area was pretty convincing. I'm only learning though so if you can elaborate on your feedback I would be interested