2/9/14 edit:
This thread was started a long while ago and since that time my methods have evolved. I still like this particular candlestick pattern, but I would say it's just one tool in the arsenal. I take a more holistic approach looking for good companies either breaking out or forming bottoms. I try not to mess around in the middle. Anyway, I post my charts on STock twits here: http://stocktwits.com/InfinitySL and elsewhere. I drop in here now and then. Thanks for stopping by.
Anyway, here's how the thread started... (unedited)
The Stock/ETF/Commodity Pinbar Thread
Background:
OK, so after inspiration from a number of the threads in the Currency section (most notably the “Silent Service Method” thread by Clockwork71) I'm going to start a thread dedicated to posting up price action in Stocks/Commodities/ETFs that I see. Hopefully this thread will also be useful in tracking whether these are profitable.
I'm using a purely mathematical way of finding pin-bars (either up or down) using High/Low/Open/Close data as well as 30-day or 52-week Highs and Lows. Using the 30-day high/low will give me a sense of the magnitude of the Pinbars that I find in the context of the recent range. The hypothesis being that a large bar will be more indicative of a future move than a small bar, so you want to see how a bar looks in relation to the range that a stock has been carving out over the last month or so. There may be a better way to do this using some measure of volatility and I may experiment with different methods as I go along, but for now, that's how I'm starting this experiment.
Other Consideration
What’s the Market doing?
Much of a stock's movement will be dependent on the market itself. No matter how good your stock selection process, if you're going short a bunch of stocks in a rally, or going long stocks during corrections, you're going to get crushed, so hopefully there's a simple way to determine the general direction to be facing: Whether Long/Short. That will evolve as I go on. I have a few ideas for this but it’s a work in progress.
Where is the pinbar?
As you can read in plenty of other threads, you shouldn’t just blindly buy/sell a pinbar. It should be in the right place – near a recent high/low, near a key Fibonacci Level, near a key moving average, recent support/resistance area, etc. I may or may not reference whether a given stock meets any of these other criteria, I’ll leave it to you to determine whether a bar is tradeable or not. But it is important from the outset to say don’t just trade every PB that is presented here, not all of them are going to be any good!
What securities will I be looking at?
Currencies are well covered on ForexFactory, so I'm going to be looking at 3 other areas of personal interest:
ETFs:
There are new ETFs being created every day, so my list is probably not all-inclusive but right now I’m examining about 525 ETFs. Some are massive, like the SPY which is the largest ETF out there that trades over 100mm shares per day or some of the smaller ones which might only trade 5,000 shares per day. Some of these smaller funds are inappropriate to trade due to their illiquidity. As a rule of thumb I’ll probably try to stick to ETFs trading over 100,000 shares per day which limits us to maybe 200 or so ETFs.
The Stock Universe:
My starting point will be the Russell 3000. This index includes the largest 3,000 stocks in the US (The Russell 3000 is pretty much the S&P 500, Midcap 400, and Russell 2000 all rolled into one index). But again, let’s be clear, not all of these stocks are worth targeting. Once you get down to the 2500th stock on the list (sorted by average daily trading volume), you're talking about a stock with a market caps around $200mm and avg. trading volumes of less than 100,000 shares. Stocks like that can be jumpy and can trade with wider bid/ask spreads. I’ll try to stay as liquid as I can but may break the rules for a promising stock (as much as I’d like to say I’m a purely technical trader, I’m a sucker for stocks with strong growth stories or compelling valuations).
Futures Universe:
I currently have 41 futures that I am tracking (notice I didn’t say trading). I may add more if I find some that might present good opportunities. I’ll also leave it to you to alert me to ones that I’m not seeing. The ones I have now include: Fixed income markets (bonds), stock indexes, agriculture, metals, and energy related futures. Some of these I can’t trade given their huge notional size of the contract, but if the futures market creates a nice setup, we can usually find an ETF that will mimic the futures trade or trade an option on the futures position.
Conclusions:
So lets recap… 500 ETFs, 3,000 stocks, 40 Futures – That’s a lot of data to look at! But given that each has its own specific supply/demand dynamics, we should be able to find some situations where the market is tipping its hand on where it wants to go.
At the end of the day, this thread is about testing a hypothesis and seeing what we can glean from daily & weekly pin bars. Hopefully it will be profitable…All comments are welcome and as we get going any readers can point out stocks that I might have missed. Sometimes what qualifies as a Pinbar can be subjective. I'll talk about how I'm filtering for these in a later post. But for now that should give you a brief overview of what I'm trying to do over here. And of course if I end up pulling the trigger on any of these, I'll let you know that too!
And away we go...
This thread was started a long while ago and since that time my methods have evolved. I still like this particular candlestick pattern, but I would say it's just one tool in the arsenal. I take a more holistic approach looking for good companies either breaking out or forming bottoms. I try not to mess around in the middle. Anyway, I post my charts on STock twits here: http://stocktwits.com/InfinitySL and elsewhere. I drop in here now and then. Thanks for stopping by.
Anyway, here's how the thread started... (unedited)
The Stock/ETF/Commodity Pinbar Thread
Background:
OK, so after inspiration from a number of the threads in the Currency section (most notably the “Silent Service Method” thread by Clockwork71) I'm going to start a thread dedicated to posting up price action in Stocks/Commodities/ETFs that I see. Hopefully this thread will also be useful in tracking whether these are profitable.
I'm using a purely mathematical way of finding pin-bars (either up or down) using High/Low/Open/Close data as well as 30-day or 52-week Highs and Lows. Using the 30-day high/low will give me a sense of the magnitude of the Pinbars that I find in the context of the recent range. The hypothesis being that a large bar will be more indicative of a future move than a small bar, so you want to see how a bar looks in relation to the range that a stock has been carving out over the last month or so. There may be a better way to do this using some measure of volatility and I may experiment with different methods as I go along, but for now, that's how I'm starting this experiment.
Other Consideration
What’s the Market doing?
Much of a stock's movement will be dependent on the market itself. No matter how good your stock selection process, if you're going short a bunch of stocks in a rally, or going long stocks during corrections, you're going to get crushed, so hopefully there's a simple way to determine the general direction to be facing: Whether Long/Short. That will evolve as I go on. I have a few ideas for this but it’s a work in progress.
Where is the pinbar?
As you can read in plenty of other threads, you shouldn’t just blindly buy/sell a pinbar. It should be in the right place – near a recent high/low, near a key Fibonacci Level, near a key moving average, recent support/resistance area, etc. I may or may not reference whether a given stock meets any of these other criteria, I’ll leave it to you to determine whether a bar is tradeable or not. But it is important from the outset to say don’t just trade every PB that is presented here, not all of them are going to be any good!
What securities will I be looking at?
Currencies are well covered on ForexFactory, so I'm going to be looking at 3 other areas of personal interest:
ETFs:
There are new ETFs being created every day, so my list is probably not all-inclusive but right now I’m examining about 525 ETFs. Some are massive, like the SPY which is the largest ETF out there that trades over 100mm shares per day or some of the smaller ones which might only trade 5,000 shares per day. Some of these smaller funds are inappropriate to trade due to their illiquidity. As a rule of thumb I’ll probably try to stick to ETFs trading over 100,000 shares per day which limits us to maybe 200 or so ETFs.
The Stock Universe:
My starting point will be the Russell 3000. This index includes the largest 3,000 stocks in the US (The Russell 3000 is pretty much the S&P 500, Midcap 400, and Russell 2000 all rolled into one index). But again, let’s be clear, not all of these stocks are worth targeting. Once you get down to the 2500th stock on the list (sorted by average daily trading volume), you're talking about a stock with a market caps around $200mm and avg. trading volumes of less than 100,000 shares. Stocks like that can be jumpy and can trade with wider bid/ask spreads. I’ll try to stay as liquid as I can but may break the rules for a promising stock (as much as I’d like to say I’m a purely technical trader, I’m a sucker for stocks with strong growth stories or compelling valuations).
Futures Universe:
I currently have 41 futures that I am tracking (notice I didn’t say trading). I may add more if I find some that might present good opportunities. I’ll also leave it to you to alert me to ones that I’m not seeing. The ones I have now include: Fixed income markets (bonds), stock indexes, agriculture, metals, and energy related futures. Some of these I can’t trade given their huge notional size of the contract, but if the futures market creates a nice setup, we can usually find an ETF that will mimic the futures trade or trade an option on the futures position.
Conclusions:
So lets recap… 500 ETFs, 3,000 stocks, 40 Futures – That’s a lot of data to look at! But given that each has its own specific supply/demand dynamics, we should be able to find some situations where the market is tipping its hand on where it wants to go.
At the end of the day, this thread is about testing a hypothesis and seeing what we can glean from daily & weekly pin bars. Hopefully it will be profitable…All comments are welcome and as we get going any readers can point out stocks that I might have missed. Sometimes what qualifies as a Pinbar can be subjective. I'll talk about how I'm filtering for these in a later post. But for now that should give you a brief overview of what I'm trying to do over here. And of course if I end up pulling the trigger on any of these, I'll let you know that too!
And away we go...
