What do you guys think about pin bars?

[the hare]

Totally agree, there should be a sticky saying:
No Pin Bars.

Waynes World ('92) - No stairway, denied - YouTube


No Pin Bars... Denied

 

[The Leopard]

Pin bars can make for some great fades .

Seriously, people would be far better off just sticking to simple principles. They look for pin bars or whatever that work rolleyes because newbies love reversals.

If you think pin bars are reversal signals, a useful exercise might be to see those that work not as successful reversals but rather as failed continuation signals.

It really could be an eye-opener, and with a bit of work might be a way of progressing beyond bars altogether.

 

[scose-no-doubt]

It really could be an eye-opener, and with a bit of work might be a way of progressing beyond bars altogether.

and on to what?

 

[rsh01]

They look for pin bars or whatever that work rolleyes because newbies love reversals.

they also like methods/strategies which do not involve too much thinking or what some would call hard work, eg testing / tweaking / testing / tweaking. with a 'PB strategy' (whatever the feck that is) it is all rather simple, and easy. And sh1t.

 

[The Leopard]

and on to what?

Don't get me wrong, I'm not knocking using individual bars as such, and they can be of some use in some circumstances.

The problem is when you place too much emphasis on artificial constructs (such as bars/candles). Then they serve as a distraction, and obscure instead of illuminating.

Concepts such as bar patterns can be a good way of getting to think about the market - what it really is I mean. But when you do, you progress beyond them to seeing the market as it really is, a collection of orders.

The bars become redundant (they don't actually exist, after all) and instead you see trends, ranges, how price moves, how it reacts, and so on. You can move beyond set ups (which is what most of these bar things are, and perhaps why they're so popular) and trade based on principles and the context of what you're seeing.

Rather than "Pin bar with tail below - buy buy buy!", usually quickly followed by "Cry cry cry, price is heading lower".

 

[The Leopard]

they also like methods/strategies which do not involve too much thinking or what some would call hard work, eg testing / tweaking / testing / tweaking. with a 'PB strategy' (whatever the feck that is) it is all rather simple, and easy. And sh1t.

Yeah, I agree. I touch on that above, but in essence it's easier (and sh1tter ) to look at a bar or two and think "There's a set up!" rather than spending the time analysing the context to find entries that might be at first glance much less clear.

I suppose for many they are a kind of crutch, although in fairness it doesn't mean they don't (or can't) tell you anything.

 

[brewski1984]

So naturally the next question is are you better off just waiting for price to hit the level you're looking for and taking the trade regardless of what the bar looks like or when it closes?

I went through the pin bar stage as I'm pretty sure everybody does but it doesn't take long to realise that the close of the bar is almost completely random and if you take it on the break of the bar you've already missed most of the move. That's not to say I don't still use them though. A good trick is to already be in and be part of the "setup", no?

 

[The Leopard]

So naturally the next question is are you better off just waiting for price to hit the level you're looking for and taking the trade regardless of what the bar looks like or when it closes?

I went through the pin bar stage as I'm pretty sure everybody does but it doesn't take long to realise that the close of the bar is almost completely random and if you take it on the break of the bar you've already missed most of the move. That's not to say I don't still use them though. A good trick is to already be in and be part of the "setup", no?

Well everybody sees things differently, but I'm not sure that lateness is the question here (perhaps I should say that's not how I see it). Although certainly one might be late, I think lateness has as many advantages and disadvantages as earliness.

My main concern would be the attribution of unwarranted importance to something like an individual bar or candle. I don't say they can't be used for certain things, but the danger is that they draw focus away from what is important, which is context.

This is true of all bar-based set ups, but I think it is particularly bad in cases such as this, which are reversal set ups. One huge improvement in my opinion that most people could make is to resolve never to take reversals, or at least only those that appear particularly strong according to their research.

'Trade with the trend' really is a good principle; 'attempt to catch reversals using sh1tty arbitrary bar formations', probably less so.

 

[DionysusToast]

Pin bars can make for some great fades .

Seriously, people would be far better off just sticking to simple principles. They look for pin bars or whatever that work rolleyes because newbies love reversals.

If you think pin bars are reversal signals, a useful exercise might be to see those that work not as successful reversals but rather as failed continuation signals.

It really could be an eye-opener, and with a bit of work might be a way of progressing beyond bars altogether.

How about an Al Brookes style failed, failure?

 

[The Leopard]

How about an Al Brookes style failed, failure?

I've read his books, they're actually OK in my opinion.

What I quite like about them is that they encourage a good way of thinking about the market, and I think seek to harness basic principles to developing one's own approach.

They could be a bit of a nightmare to read, and I think some things could be clearer. And of course, I don't agree with everything in them, but generally they're OK if you want to put some serious hours into price action.

Failed failure is a valid concept I think, although it's not original to him. There are lots of things in there though of that ilk that could be useful. So fading a signal (banking on the failure) that you would take in the context of an opposite trend, things like that. I also quite like his ideas about ways to jump on incipient strong moves.

The main value of the books though I think is his emphasis on identifying the trend and finding ways to get on board, and not attempting reversals unless you really know what you're doing. His pull back in trends ideas are good too I think.

So not perfect by any stretch, but I think they are a lot more useful that the vast majority of trading books. One could probably find most of what one needs in those plus a few things aimed at psychology and that side of things.

 

[DionysusToast]

In my most humble opinion....

A pin bar should not be given any more credit than a 2 bar pattern that sees price move down and then back up. The pin bar itself only forms because of the time at which the move down (then up) occurred. if it happens a minute later, it is no longer a pin. Price action is still the same.

There ends my statement of the bleedin obvious.

As for what it represents - does it represent excess on one side or the other? A market that got excessively short or long? Well perhaps it does sometimes, but then the context in which it appears is as important as the bar itself. If it's in the middle of yesterdays range and you day trade, it's probably not excess.

To trade a pin, I think you should look at stuff like the "Diffusion Model" as discussed by Jim Dalton - it's on line. You should look for lots of idiots (or laggards) jumping onto the end of a move. If you have volume in your market, high volume wouldn't hurt either.

With a move down and a rejection, you quite often see nothing at all special occur until it is too late. Not much volume on the way down and a snap back up that leaves you with little time to get in. Not much you can do about that IMO. On the other hand, you often see people getting too enthusiastic in one direction and that is something you can get on earlier. although it takes huge spheres to do so.

If you can't get in early, then you have a long 'candle' that you now think is going to mean market has reversed. Your issue now is where to get in. If you do have a rejection and a move back up - buy the top of the candle by all means but be prepared to sit through decent pullback and a large stop.

To me - once you see a sign that the market is no longer going one way, you have to sit on your hands and let it retrace/retest or else you get in at a crappy price. Sometimes of course it just carries on without you - and this of course is exactly what makes you buy highs & sell lows.

It's a tricky business whatever way you approach it.

Can I get a spam score on this post please?

1 - spam free
10 - outrageous, post reported

 

[DionysusToast]

I've read his books, they're actually OK in my opinion.

What I quite like about them is that they encourage a good way of thinking about the market, and I think seek to harness basic principles to developing one's own approach.

They could be a bit of a nightmare to read, and I think some things could be clearer. And of course, I don't agree with everything in them, but generally they're OK if you want to put some serious hours into price action.

Failed failure is a valid concept I think, although it's not original to him. There are lots of things in there though of that ilk that could be useful. So fading a signal (banking on the failure) that you would take in the context of an opposite trend, things like that. I also quite like his ideas about ways to jump on incipient strong moves.

The main value of the books though I think is his emphasis on identifying the trend and finding ways to get on board, and not attempting reversals unless you really know what you're doing. His pull back in trends ideas are good too I think.

So not perfect by any stretch, but I think they are a lot more useful that the vast majority of trading books. One could probably find most of what one needs in those plus a few things aimed at psychology and that side of things.

True enough.

At the end of the day, he has a method that he believes in and applies consistently.

I couldn't get through the book though. It felt like he took a deep breath and then came out with it in one sentence.

Did you read 1st edition or the 2nd round of Brookes books?

 

[DionysusToast]

btw - "how do you know it's idiots jumping on board"

well - you don't really - but a huge volume spike in the direction of a short term trend with no news behind it - probably fnckwits....

 

[The Leopard]

A lot of good stuff to agree with there. Just a few thoughts:

In my most humble opinion....

A pin bar should not be given any more credit than a 2 bar pattern that sees price move down and then back up. The pin bar itself only forms because of the time at which the move down (then up) occurred. if it happens a minute later, it is no longer a pin. Price action is still the same.

Or indeed a 20 bar pattern, or a 200 bar pattern. Like I say, pins don't exist, and as you say, display howsoever you will, "Price action is still the same.".

There ends my statement of the bleedin obvious.

As for what it represents - does it represent excess on one side or the other? A market that got excessively short or long? Well perhaps it does sometimes, but then the context in which it appears is as important as the bar itself. If it's in the middle of yesterdays range and you day trade, it's probably not excess.

Yes.

To trade a pin, I think you should look at stuff like the "Diffusion Model" as discussed by Jim Dalton - it's on line. You should look for lots of idiots (or laggards) jumping onto the end of a move. If you have volume in your market, high volume wouldn't hurt either.

Possibly. I'm somewhat unsure with regard to volume. It's the kind of thing I keep revisiting because it is absolute and I really think I should be able to incorporate it, I've just never been able to add anything with it when I've tried.

With a move down and a rejection, you quite often see nothing at all special occur until it is too late. Not much volume on the way down and a snap back up that leaves you with little time to get in. Not much you can do about that IMO. On the other hand, you often see people getting too enthusiastic in one direction and that is something you can get on earlier. although it takes huge spheres to do so.

"Not much you can do about that". Possibly, although I think what you are often looking at there is a buy or sell vacuum (hence low volume). At the right location (rather, at the right price) and in the right context (crucial, I think) one can use these situations very profitably. The problem for me is that in my case it is likely to remain for the most part theoretical - because of the giant spheres requirement you allude to.

Whatever, the situation you describe does rather illustrate the nonsense of waiting for a magic bar to tell you when the market is turning.

If you can't get in early, then you have a long 'candle' that you now think is going to mean market has reversed. Your issue now is where to get in. If you do have a rejection and a move back up - buy the top of the candle by all means but be prepared to sit through decent pullback and a large stop.

Essentially, yes. It is problematic, the only thing I can suggest is to try to carefully evaluate the context.

To me - once you see a sign that the market is no longer going one way, you have to sit on your hands and let it retrace/retest or else you get in at a crappy price. Sometimes of course it just carries on without you - and this of course is exactly what makes you buy highs & sell lows.

It's a tricky business whatever way you approach it.

Can I get a spam score on this post please?

1 - spam free
10 - outrageous, post reported

Off the record, 1. But I just report all of your posts on principle. Jon's told me that if I don't stop it he's hiring a hit man, he hasn't gone to bed for three days trying to clear the backlog.

Some good points there. It doesn't take much to see the limitations of bar analysis, and an obvious step is to incorporate - or use exclusively, perhaps - DOM (see, I'm doing your job for you).

My problem (I stress 'my') is that I've found it tricky to do so, so I stick to charts. There are disadvantages, but overall they seem to be outweighed by the clarity and focus this brings. There's literally nothing on them except price (or rather a graphic representation of past price moves). The other thing is using the ladder really seems to take one down to the microscopic level, and I'm not comfortable (or perhaps tight enough or skilled enough) to operate effectively down there.

 

[The Leopard]

True enough.

At the end of the day, he has a method that he believes in and applies consistently.

I couldn't get through the book though. It felt like he took a deep breath and then came out with it in one sentence.

Did you read 1st edition or the 2nd round of Brookes books?

Oh Good God, the second lot, the three volumes. The first one, are you nuts?

I did look at the original, but how the hell anyone was seriously expected to get through it, God only knows. Like you say, deep breath, spew a million words, The End. Terrible.

Good point about belief and consistent application. A great deal in that (the latter implies and almost demands the former, of course.

 

[DionysusToast]

In terms of volume, in my opinion, when you see a spike down after the market has already been moving down for a while, it alerts you to the potential that lots of people have just got themselves offside.

Of course, a bit of news could have caused it or it could just be another push down which makes such things rather tricky to backtest.