Strategy Pin Bar Reversal © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Disclaimer Trading in any form involves risk. The information presented represents the views of the author as of the date of publication. Because of the rate with which conditions change, the author reserves the rights to alter and update his opinion based on the new conditions. This training is for informational purposes only and the author does not accept any responsibilities for any liabilities resulting from the use of this information. While every attempt has been made to verify the information provided here, the author cannot assume any responsibility for errors, inaccuracies or omissions. Any slights of people or organizations are unintentional. By participating in this training, you are deemed to have accepted any risk of loss as your own. © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Strategy Pin Bar Reversals Selection Timing Management Practical © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Selection: Daily Chart Do we have the correct price action? We want a bullish pin bar reversal on the daily chart in order to go long and a bearish pin bar reversal on the daily to go short. Bullish pin bars Bearish pin bars A bar with a ‘tail’ and the open and close in the top half of third of the bar A bar with a ‘tail’ and the open and close in the bottom half of third of the bar © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Selection: Hourly Chart Do we have the correct price action? We need the bullish pin bar coincide with a bullish reversal pattern on the hourly... ...or the bearish pin bar reversal coincide with a bearish reversal pattern on the hourly Bullish reversal patterns Bearish reversal patterns A Double Bottom A Double Top An inverse head and shoulders An head and shoulders © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Selection How many technical confirmations do we need? A different number of technical confirmations are required depending on whether the pin bar is rejecting a trend, a hard level or a soft level What’s Essential A Trend Hard level Soft level Pin Bar Reversal Bar Essential Essential Essential Reversal On Smaller Timeframe Essential Essential Essential Additional Technical Confirmations (see next page) At least TWO Not Essential Not Essential (but a bonus) (but a bonus) © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Timing Is the price action rejecting a technical level? We want AT LEAST TWO technical reasons below – especially if a trend based trade Cyclicity / Trend line – do we have higher highs (peaks) and higher lows (troughs)? Tradable opportunity Is our reversal bar rejecting a ‘hard’ level? This is a level which has not being broken in at least 10 months Do we have a rejection of the weekly or monthly Pivot point, R1/S1 OR even better R2/S2 levels? Is our reversal bar rejecting a ‘soft’ level? NB: A level which has been broken but has been respected in the past Is our test bar rejecting a sloping, previously rejected EMA (ie. The 20) NB: not applicable in ranging markets Do we have RSI divergence (setting 14?) on Daily and Hourly in favour of our desired direction? Is our reversal bar rejecting a ‘big’ number? Generally Double or triple zeros Tradable opportunity Do we have a rejection of a Fibonacci level? Our soft level Bearish divergence: the RSI’s cyclicity has stopped mirroring the price action’s and is starting to separate and ‘diverge’ in opposite directions 0.50, 0.618, 0.786 are best © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Management We need to always know our entry, stop loss and exit levels prior to placing the trade Bullish pin bars Bearish pin bars Entry – BUY HERE Stoploss: High of bar + spread + 1 pip High of bar + spread + 1 pip Stoploss: Entry- SELL HERE: Low of bar – spread – 1 pip High of bar – spread - 1 pip Place the trade after the pin bar has closed (after 10pm GMT) OR early the next morning © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Management Set your target At the price where you want your broker to automatically exit you from the trade if and when price action reaches it. Select it within the realms of probability! Accept you are presented with a ‘trade-off’ where you have a choice of a higher frequency of wins Vs the rate of reward per win: You can select a high probability / low reward target If this option is taken, you can expect to have a higher frequency of trades although smaller wins. You will most likely have a higher frequency of winning trades to losing trades. Or: You can opt for a low probability / high reward target You can expect to have a higher frequency of losing trades to winners – BUT your winning trades will have a far higher percentage gain It is likely, however, that you will exit your trade through it hitting your stoploss while trading it – in advance of your target. © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Management Then walk away from that screen for 24 hours! After 24 hours has elapsed, it’s then time to check your trade. If it has not triggered – delete the order. We do this because it’s a sign that there’s no decisive momentum In the market in the direction we want it to go. If your order has triggered, then we need to manage it in an mechanical, rule-based way . 1) We must lock in as must profit as possible and not let a winner turn into a loss 2) We must also give our trade some slack so we are not prematurely stopped out © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Management If you have been triggered into the trade then... If long... If short... If you are long, trail your stoploss below the low ( - spread -1 pip) for EVERY 2nd buyer bar 1 2 Trail 2 2 If you are short, trail your stoploss above high (- spread - 1 pip) for EVERY 2nd seller bar Trail Trail 1 1 1 Trail Trail 2 1 2 © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 1: GBPNOK (sell) © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 1: GBPNOK (sell) TARGET - A bearish pin bar reversal (high test) - Rejecting a soft level of resistance - 0.50 Fibonacci Retracement - Head and Shoulders Reversal on the ..hourly timeframe Opposite: A head and shoulders formation on the hourly © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 1: GBPNOK (sell) Stoploss Entry Trail Stoploss Trail Stoploss Trail Stoploss Entry: 92697 Stoploss: 93533 Target: 90530 Reward/Risk: 2.5:1 Actual Exit: 92040 Gain/Loss: + 0.78% TARGET © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 2: GBPNZD (sell) © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 2: GBPNZD (sell) - A bearish pin bar reversal (high test) - Rejecting a hard level of resistance - A triple top reversal on the hourly timeframe TARGET Technicals below are a bonus:- Rejection a psychological number: 2.100 - Daily RSI divergence © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 2: GBPNZD (sell) Stop Entry Trail Stoploss Trail Stoploss Trail Stoploss Trail Stoploss Trail Stoploss Trail Stoploss Trail Stoploss Trail Stoploss Trail Stoploss Entry: 20856 Stoploss: 21065 Target: 18907 Reward/Risk: 9.3:1 Actual Exit: 19458 Gain/Loss: + 6.6% Trail Stoploss Trail Stoploss © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 3: GBPCHF (sell) © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 3: GBPCHF (sell) - A bearish pin bar reversal (high test) - Rejecting a soft level... - Psychological number @ 15100 - Reversal on the hourly timeframe - Fibonacci cluster Above: Head and Shoulders on hourly © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 3: GBPCHF (sell) Stoploss Entry Entry: 15034 Stoploss: 15117 Target: 14840 Reward/Risk: 2.3:1 Actual Exit: 15040 Gain/Loss: Break Even Trail Stoploss TARGET © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 4: FTSE (buy) © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 4: FTSE (buy) - A bullish pin bar reversal (low test) A double bottom on the hourly timeframe Rejection of a soft level 0.618 Fibonacci Rejection Opposite: A double bottom on the hourly timeframe © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 4: FTSE (buy) Entry: 5677 Stoploss: 5632 Target: 5860 Reward/Risk: 4% Actual Exit: 5770 Gain/Loss: + 2% TARGET Trail Stoploss Entry Stoploss © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 5: GBPCAD (buy) © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 5: GBPCAD (buy) - A bullish pin bar reversal (low test) - An inverse head and shoulders on hourly - Rejection of a hard level Opposite: An inverse head and shoulders on the hourly timeframe © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution Example 5: GBPCAD (buy) Entry: 15349 Stoploss: 15239 Target: 16105 Reward/Risk: 6.8% Gain/Loss: + 6.8% TARGET Trail Stoploss Trail Stoploss Trail Stoploss Entry Trail Stoploss Trail Stoploss Trail Stoploss Stoploss © 2012 TheLazyTrader.com. Any reproduction or distribution prohibited and will result in prosecution
