J16 pinbar discussion

In the last year I have tried lots of ideas but this is the one that I keep coming back to and now I am beginning to have some success using PA on small time frames - 5 to 15 minutes. Whether this is a short term or long term strategy for me we shall see, however my 'eye' is improving all the time.

I tend to use a stop loss and take profit of 1 ATR so I am not getting big wins but with money management and compounding it should still work nicely.

Now my question for anyone else using pinbars : The point of a pin bar is that it shows a change of direction (or continuation of direction!), the market goes up and comes down again. As such for the pin bar to be valid the next bar should continue down rapidly and not first retrace up the length of the pinbar. So I am looking at reducing my stop loss to say 1/2 atr1 and keeping my take profit at atr1. Hence potentially increasing my gains.

Has anyone else looked at anything similar. I am going to have to go through a lot of data anyway but I am curious as to others findings

thanks

max

I trade pinbars all the time, although not on the smaller timeframes. I tend to stick to 4hr or above, with the occasional glance at the 1hr charts. I am long NZD/USD at the moment as a result of a juicy pinbar on the daily chart at yesterday's close, with a target of the 56.50 region. I have found that the longer term TF's are generally more reliable and my initial stop placement is always at the Low/High of the pinbar. If the bar runs, the SL can be moved easily enough. The main reason I dont revert to lower TF's is that I got burnt a few times, but if you are nimble I guess it's possible to succeed.

I also like to add my own levels of historical S & R to each chart which serve as targets, and also tend to be more than 1 ATR, so the R:R is good. Here is what I mean. I have added the blue line which is my target at 0.5654.

I guess though that if it retraced today to .5370 from where it is now you'd hold on to the trade. That is what I have always done til now on multiple timeframes however I am looking at the idea of risking 1.25% to make 2.5% ie having the stop at around .5370 instead of .5273 and take profit of around .5681. Having had a look back I would not have as many succesful trades however it appears that I would make more profit.

The way I see it is that the pin bar represents a move in direction A followed by a complete retrace, if this retrace does not immediately carry on in the same direction then surely the pinbar is worthless and you are back to a 50 -50 chance of success or failure.

Unfortunately this is very difficult to backtest objectively so I will have to forward test it probably placing two orders at once on two accounts and see what the results are.

By the way that daily pin was a really nice 4 hr pin too

Max

Yes, I agree it was a nice 4hr setup. I also agree with your thoughts on pinbars in general. I have found they are a no-nonsense indication of market movement and provide reliable entries/exits etc which is why I trade with them.

very cool signature by the way Kristo.

I'll keep an eye on it for the next few weeks, I am quite liking the shorter timeframes though. I know everyone complains of noise however I think that the 5 and 15 minutes signals may be 'truer' and less affected by unpredictabilities than daily signals which may take a week or two to come to fruition.



max

Hey thanks..............

I'll watch the shorter TF's on the majors as well and possibly ride a few with you. Its been a long time since I have traded PB's on the 5 or 15 minute charts.

Have a good weekend.

Hey Max Pips,

If you look back over your charts you'll see that a lot of pin bars retrace before taking off. Some do move instantly but from my backtesting I see far more that retrace first. There are all kinds of ways of playing pin bars, some more aggressive than others. Tightening stops is more aggressive. Some do it, James himself doesn't. It's your choice.

I also would be a little careful of pinbars on the lower timeframes. There's no reason money can't be made but you'd better be sure you know where your support resistance levels are. Those who do take extreme low time frame pin bars usually do it based on extremely strong confluence of daily and weekly S/R levels, fibs etc. Usually it helps to have proved yourself on daily first.

I can see you are being drawn to a more aggressive style. Every trader is different but usually successful lower tf traders of the J16 material have spent a while on the dailies and weeklies first. Try following raczekfx's posts in the main j16 thread for an understanding of how an aggressive trader works.

Hope that helps. Good luck.