P2: A batch of FX market trades

[aus_trader]

You're free to do anything you want, but test it first.

My view is that the pin bar hasn't triggered a trade until price trades below it. Your entry is before my trigger and I can't start a trade there.

Once triggered, I can chose to place my iSL above the pin bar high or reduce the risk size and place the iSL above the entry bar.

View attachment 89365

Correct me if I am wrong, but looking at the chart this pin bar entry looks like a reversal strategy as opposed being in the direction of the trend...

 

[peter2]

Correct, this was in relation to a discussion about pin bars in general with sasch. Hopefully I've given sasch some suggestions to research. Pin bars by themselves don't back test well, but in certain locations they can be made profitable.

I'll be sticking to the 4T trend trading system for my trades.

 

[aus_trader]

Correct, this was in relation to a discussion about pin bars in general with sasch. Hopefully I've given sasch some suggestions to research. Pin bars by themselves don't back test well, but in certain locations they can be made profitable.

I'll be sticking to the 4T trend trading system for my trades.

Yes I think most candlestick patterns are not reliable on their own. That's why I thought to ask about it. I think sasch may find this with some testing i.e. pin bars at any old location doesn't usually produce a reversal, not often enough. However these type of patterns can be a useful tool for confirming a trade e.g. a pin bar may confirm a support level by showing rejection of lower prices.

 

[peter2]

A pin bar and a few others are more reliable than most. You may have noticed tonight's rally in all the indices. Most charts were in a down trend (using 4T) but there were a few where the up trend was intact. JP225 was one of them. Does this pin bar make you drool?

 

[Lone Wolf]

The textbook trading method is to pick a stop, set your profit target to at least 2R, then sit back and wait for the result. A common theme in your trading is that you aren't afraid to take a 1R profit. Normally cutting your winners short is frowned upon, but since you also cull losers before they hit your initial stop, the end result skews the R:R in your favour.

I have no real point, except to say I like this aspect of your trading. I think if you didn't have the skill to know when to close early, the results would be quite different.

 

[peter2]

I do tend to take profits quickly when trading these markets. I haven't reviewed these or my own trades applying a more objective exit method. I may be disappointed at missing out on much more. I don't know.

You're right in that my main edge is skewing the results to create a profit. I don't know if there's an edge with my entries or my exits, but I can create one overall.

I think you've also uncovered another one of my psychological biases. I'll use stats to try to outline this. My stats in this thread will be approx W% 60%, AW 1.3, AL -0.65, Exp 0.52. Those textbooks you mention have stats like this, W% 50%, AW 2.0, AL -1, Exp 0.50. There's no significant difference in the expectancy (or edge). However there's a huge psychological difference for me when trading to get the textbook stats.

I prefer to have a little more wiggle room when I start a trade even though I know I'm entering at the correct time and price. The size of my iSL is slightly larger (one bar back, an extra few pips *) than others (and the textbooks). If my trade starts well then I have room to reduce the open risk quickly. If the iSL is tight, there's no room to reduce open risk. The difference between the two iSL methods is largely psychological for me. Psychologically I am more comfortable losing 0.7R than -1R. Empirically I know the tighter iSL is the better strategy but I find it difficult to implement consistently.

I won't elaborate on the management of winning trades other than to say that I am more comfortable having frequent wins (W%>60%).

My point is that we all have to trade in manner that's psychologically comfortable in order for us to be consistent over the long term.

* My use of the 80% SL guideline is an attempt to reduce the negative effect of my biases.

 

[peter2]

Whoops, I forgot that this thread is out in the open and not in the members private section. What will those in Germany and Switzerland think of my psychological issues ? @bigdog Don't tell them please.

 

[peter2]

There are also practical reasons why I tend to grab quick profits in these markets. You can see the effect when one politician disagrees with another. Price reacts.

The advantage of these markets and the methods I use, means there's plenty of opportunities.

 

[sasch]

Potential 4T trade coming up on EUR/USD?

USDX is still showing weakness.

4hr chart

 

[peter2]

@sasch If this is a pin bar setup then I'd agree it's worth a shot. The trigger price you selected looks OK. Would you prefer to see price trigger a pin bar immediately? If the pin bar indicates a reversal I'd like to see price reversing quickly. This one hasn't triggered so far. If it's going to trigger it'll be in the UK session.

IMO the 4h trend is unclear, it's sideways and has been for the last few days. There's been attempts to go higher that failed, an attempt to go down that failed. Price is hovering near the 1.1700 level. There's no setup now for me and there's still 90min until this bar ends.

I'd need to see a successful break out or break-down and then trade the first pull-back. I've already started two EURUSD long trades this week for a quick win and a quicker break even.

USD is slightly weak atm but so is EUR and that's why this pair is going sideways.

NZD reported their GDP this morning and that's where the action was. The EURNZD chart shows a great 4H trend that could have been traded.

 

[peter2]

Let's track @sasch 's EURUSD pin bar setup that's just triggered.

B 1.1694, SL 1.1674, risk 20p, T1 1.1714, T2 1.1734
T1 looks the more promising target as there's been supply every time price gets there. However if price gets above all this, the reward is bigger.

I won't comment further as I don't want to influence sasch's trade management.

 

[sasch]

@sasch If this is a pin bar setup then I'd agree it's worth a shot. The trigger price you selected looks OK. Would you prefer to see price trigger a pin bar immediately? If the pin bar indicates a reversal I'd like to see price reversing quickly. This one hasn't triggered so far. If it's going to trigger it'll be in the UK session.

IMO the 4h trend is unclear, it's sideways and has been for the last few days. There's been attempts to go higher that failed, an attempt to go down that failed. Price is hovering near the 1.1700 level. There's no setup now for me and there's still 90min until this bar ends.

I'd need to see a successful break out or break-down and then trade the first pull-back. I've already started two EURUSD long trades this week for a quick win and a quicker break even.

USD is slightly weak atm but so is EUR and that's why this pair is going sideways.

NZD reported their GDP this morning and that's where the action was. The EURNZD chart shows a great 4H trend that could have been traded.

Thanks for your thoughts on this one.

I liked how the pin bar bounced off 4 hr trend line that has been in place from around the 10th of September. But I did notice the selling at the $1.17 mark which you commented on.

It sounds like your approach is to cycle through the current open market sessions looking
for a catalyst to generate short term momentum, such as a news announcement, politician comment ?

 

[sasch]

Let's track @sasch 's EURUSD pin bar setup that's just triggered.

B 1.1694, SL 1.1674, risk 20p, T1 1.1714, T2 1.1734
T1 looks the more promising target as there's been supply every time price gets there. However if price gets above all this, the reward is bigger.
View attachment 89405
I won't comment further as I don't want to influence sasch's trade management.

Stopped out at 1.1688 on this trade, which equals -0.3 R, I think. Looks like I may have been too
aggressive with my trailing stop, as the price seems to pushing up again, right after it hit my stop.

I did take another trade based on the same pin bar, instead buying on a ~50 retracement on the same pin bar, but decided to exit on 1R. Testing each of these strategies side by side at the moment.

 

[CanOz]

With trailing stops, my experience is that I've been poor at managing them in a discretionary fashion, so I adopted a mechanical stop. I also don't mind taking profit at a structural target.

 

[sasch]

With trailing stops, my experience is that I've been poor at managing them in a discretionary fashion, so I adopted a mechanical stop. I also don't mind taking profit at a structural target.

CanOz, by mechanical stop, do you mean you use a bot or automated stop strategy, or do you
just leave the stop loss alone once placed?

Which is what I should have done with this one, as it just hit 2R. I hope someone on here was more successful with this trade.

 

[sasch]

Let's track @sasch 's EURUSD pin bar setup that's just triggered.

T1 looks the more promising target as there's been supply every time price gets there. However if price gets above all this, the reward is bigger.

Good call there Peter

 

[peter2]

Just back from tennis, open the MT4 (MT$) and "ka-ching" +2R in the bag for the sasch setup. I was just about celebrate with sasch but I see he's stopped out(?), but got back in (?).

This setup went to +4R. way to go, @sasch .

Trailing stops: I agree with Canoz, they're tough to apply consistently well and it's much better to have a set procedure. For sasch and others following along we're trading 4hr bars, so we can only trail below 4hr bars. We never use 1min, 5min, 15min, 30min, 1hr bars to trail our exits when we're trading 4hr bars.

Looking at the 1hr chart, price never traded below the low of the prior bar until it reached +4R. Getting stopped out of this trade before 2R is poor management.


Let's leave this trade feeling good with sasch's contribution in the results speadsheet.

 

[peter2]

I'm willing to assist anyone like sasch is getting organised to trade in a more professional manner. I hope sasch learned heaps from this one trade he/she spotted.

I want to thank sasch for starting a dialogue. We discussed pin bars, then sasch was enthusiastic enough about trading to post a setup and asked for my thoughts on it. The setup complied with my System 4B outline and I thought it worth a shot.

I have to be careful in that I'm not allowed to tell or convince anyone to trade. If I think someone may take a trade mentioned here I can't tell them how to manage it. However once a trade is complete we can discuss everything as it becomes an educational topic.

I hope sasch; decides to become a pin-bar master,
researches how other traders trade pin-bars,
realises that he/she doesn't have a trade plan and that one is necessary,
has started keeping detailed records and perhaps a journal
continues to ask questions
continues to post interesting setups

ps: I got my 2R because sasch posted his setup. Thank you.

 

[CanOz]

CanOz, by mechanical stop, do you mean you use a bot or automated stop strategy, or do you
just leave the stop loss alone once placed?

Which is what I should have done with this one, as it just hit 2R. I hope someone on here was more successful with this trade.

Regarding a “mechanical” stop, this can be a rules based stop (example: higher lows for a long on your chosen time frame, value area lows and highs) or an indicator (SAR, ATR Stop, SMA). The point is that you do it consistently and journal or log what you do so that a review process can allow you to see how this method is performing and what other methods could be used to improve performance.

Great thread Pete!

 

[sasch]

Just back from tennis, open the MT4 (MT$) and "ka-ching" +2R in the bag for the sasch setup. I was just about celebrate with sasch but I see he's stopped out(?), but got back in (?).

Lets say I learnt the hard way on this one, but the lesson is going to stick.

I'm willing to assist anyone like sasch is getting organised to trade in a more professional manner. I hope sasch learned heaps from this one trade he/she spotted.
...ps: I got my 2R because sasch posted his setup. Thank you.

Thank you, Peter for taking the time out of your day to teach, and post examples.
This thread is becoming a great resource!

p.s. I am a he.