One problem to solve

Hello everyone,

I am trying to read the graph these days, with all the questions asked on the forums, and I believe that these answers are really helpful.

I am currently trading the pinbars and double confirmation. I dont know how to name this, but it’s basically to find a pair which has tried to go through the price level for more than once in a short distance (consecutively 2 days, for example) and then generate the conclusion that these pairs are going to go in reverse directions.

Here are some examples. The blue squares show what I mean by reversal after a double confirmation, usually at an important S/R level.



However, there is this anomaly in all these patterns. The red square shows that even after a double hammer
showing that the price level has been denied twice in a row. The next candle still pushed the pair up.


I believe that my logic is mainly accurate, only I don’t like to make errors, so I’m trying to understand my error of judgement in this NZDUSD pair so that I can judge the charts better.

Thank you so much for your help!

Wllen1

Pin-Bars are good ones to trade, especially on the daily charts but a good thing to remember is that you can’t win every trade - you never know what the price is going to do.

You’re doing the right thing by looking for the price rejection candle at support/resistance levels but you can’t always be right. I was going to say “as long as you’re right more times than you’re wrong” but that’s technically not true either, as long as your winnings out-weigh your losses then it’s a good approach to follow.

Niall Fuller has some decent YouTube videos on this; don’t watch too many though as they get very repetitive very quickly.

What you have shown us does not represent an error on your part. On the contrary, you have shown us a trading signal which appears to be reliable a high percentage of the time.

You have highlighted 7 instances of double pinbars, 6 of which signaled a short-term retracement. That’s an 85.7% accuracy rate (based on the 7 examples you furnished). If this double pinbar signal is really that accurate, then you have found something worthwhile.

It will require many more than 7 examples to prove the validity of this signal. But, if it proves to work anywhere near 85% of the time, then you should be able to trade this signal profitably.

A profitable trading strategy will require more than this signal. It will require that you detect the signal immediately, and enter a trade promtply. It will require that you monitor your trade to detect when a retracement has run its course, and then get out of your trade quickly. And it will require that you fine-tune your stop-loss placement, so that one bad signal out of 7 will not cause a serious loss. But, you can do all of those things.

One bad signal out of 7 does not indicate a failed strategy. No trading strategy ever devised works 100% of the time. Forex trading is based on probabilities. There are no absolutes.

By the way, in addition to double pinbars, consider using “railroad tracks”, in exactly the same way. Railroad tracks consist of two long, side-by-side candle bodies, of opposite color, with or without wicks. They frequently appear at short-term and intermediate-term swing highs and swing lows.

Thank you all for answering back!

Now that I understand that this method does work, I also need to fine tune my timing of entry. As you can see, many of these double wick rejections reject the price level back 20-30 pips during the trading day (before 5PM NY chart). Right now, I am approaching this situation with the 4 hr chart. If I see that there is a candle showing rejection and already closed on 4 hr chart, and if the daily candle already closed the day before shows the rejection of this price level I buy in. It’s worth to mention that I will only enter the pair if the closing of 4 hr candle shows a rejection on the daily chart.

The risk is that there is always the possibility that the price will pierce through this level. You see, usually I only start to buy after the close of NY daily chart at 5 PM. Doing so can miss this fall back of 20-30 pips that make my profit.

In other words, I’d like to know from which moment I can be sure that a second rejection is confirmed, whether it’s the closing of daily candle at 5PM, or the closing of a 4hr candle showing on the daily chart that this price level has been rejected.

Thanks for sharing your experience!

Wllen1

You will never get all your trades right. Set your stop loss levels as you enter your trade and accept the loss, move on to the next trade. Don’t think that a loss will turn in your favor, true it can happen, and understand when to exit a trade. Stick to your risk management and understand how many pips you can afford to lose in order not comply with your own risk level.