I haven’t posted much on this site for a while but just wanted to ask your opinions. I have been reading a lot of articles by Nial Fuller (Forex trader 15 years) some of you may know of him. i have been learning his techniques with price action + key levels with the help of the odd indicator like the MA. I’ve been demo trading about 2 months at the moment and currently out of 10 trades I have taken I’m at a loss of -£186. I’m going to be demo trading for quite some time till I can build a decent capital and only once I really master price action. I wanted to ask your advice on support and resistance levels as I am still quite new to all of this. How far back do you go to work out these levels?
In trending markets which I focus on a lot I do also use trend lines to tell if the market is changing direction by breaking the trend instead of trying to pick tops and bottoms. Recently I have also been focusing just on the Pin bars and trading that signal in line with the trend which both trades so far have been in profit but my total was still in the negative. I’ve made a trade log spreadsheet which I keep track of all my trades, current price of the currency/commodity, SL and TP target plus my Risk : Reward ratio and the dates which I entered and exited the trades.
Is there any other advice you guys could help me with pin bars (I only trade daily and the odd time I look at 4hr charts)
Well, trading in a pin bar setup with support resistant level is a good entry! But, you can’t rely in a setup so blindly! You may see, so many false pin bar setups because of market context!
Yeah I know that which is why I look to mainly trade pin bars from key levels or within the direction that the market is trending. I will set a stop order to buy or sell at the nose of the pin bar and stop loss will be set at the end of the pin bar tail unless there is a support/resistance in the way in which I set my stop about 20 pips above the level incase price reverses through. Depending if the target of at least 2:1 is achievable I will sometimes try and set the order to buy or sell at a retrace of about 50% so I can get a tighter SL and probably a better TP. If that is what you meant about blind setups?.. does that help me avoid the false signal bars?
The basic method you’re using is a very sound, sensible and potentially profitable one.
It’s still a long way from that to making the method into a system, that’s to say making it safe and profitable in practice rather than just in theory. Stops and targets are among the criteria that make the difference between the two.
I think it can be viable even with wide-ranging answers to that. In other words it doesn’t necessarily matter all that much.
You just need to be consistent and develop a method that both backtests and forward tests safely and profitably.
It’s important to give more weight to more recent levels of S/R and to levels of S/R with mutiple touches.
Over how many trades?
That makes amassing enough statistical evidence very time-consuming.
I’ve done better on shorter, faster time-frames. The signals are less reliable, but there are so many more of them that it’s still better. For me, anyway.
You might also do better with a 1:1 R:R than with 2:1, again because there are so many more trading opportunities.
This forum’s full of “advice” from people who are beginners themselves, suggesting that people shouldn’t trade with less than a 2:1 R:R. They’re all saying it because all the others are saying it and it’s what they’ve read all over the internet. I think it’s all mistaken. Successful, profitable, institutional traders are very often trading with far lower R:Rs than retail traders, and it’s worth thinking about why.
With the S/R levels do you work off the most recent high made and test to see how many times that level has hit as I know its more of a zone rather than an exact price level. But im still learning how to plot the levels to make sure im targeting the right areas. My total was negative over 10 trades but I have only just previously been doing the pin bar signal. I was trying to do the inside bar strategy which caught me out a few times. I tend to look for signals end of day usually around the NY close and generally trying not to overtrade but I get what you meen in that more signals appear on the lower frames. I might check the 4hr and test my results on there too.
Yes - definitely a “zone” really, rather than a “level”. But the width of the zone will be relative to the time-frame and volatility.
There’s nothing wrong with that, either. I trade those - taking a breakout of the mother bar (not a breakout of the inside bar) when it’s in the direction of the underlying trend. Not all winners, naturally, but good odds.
10 isn’t many trades to be drawing conclusions from?
I have seen a bunch of Niall Fuller’s videos and they seem down to earth and based on good TA.
However, where we part company is on the importance of entry patterns (like pin bars) and price levels. I used to start my target selection by looking at all the charts I could, searching out the right entry patterns. I have become more successful with fewer stops hit since I turned this on its head and selected my targets first, then worked out a way to get into each.
These days I focus on assessing the strength of a trend. The strongest go on my target list and when cash-flow permits I go to the best looking target on the list and just see if I can get in on basically any old pattern. So, if price pulls back for 1 day, that might be enough - as long as the trend is still strong, and there is a TA-based price level not too far away which I can use for my SL: at this stage I’m not setting TP’s, I like to let the trades run until the trend weakens, not until the trade weakens.
PS: I am deeply unfashionable in that I don’t trust any chart less than daily. The 1hr, 4hr and 8hr time-frames often used are irrelevant to the opening hours of the businesses driving the forex market in its main trading centres. e.g. its is irrelevant if Japan sets a new high on the EUR/USD 4hr chart, as the volume is so low when London and NY are closed, it just doesn’t mean anything. Actually I’d prefer to have daily charts that featured the London open and ran until the NY close and ignored the Asian session, but I can’t re-set my software to do this.
You’re not alone there, RISKonFX: my experience on that point is also different from Tommor’s (and so, of course, is the experience of loads of institutional traders) though I certainly have plenty of respect for Tommor’s posts around here.
I have to admit, nearly all the successful trades see around the web use the 4hr charts as their main sources of TA. It just isn’t something I can make work for me.
Of course, the concept of a daily bar in forex is itself a bit misleading, as the market trades 24hrs/day Mon-Fri. I suppose the only universally accurate close is on the weekly bar. But for most purposes, the daily is close enough.
Yeah i think there is alot of profitability in the 4hr charts, I’m just not too well up on them just yet and usually they tell new forex traders to maybe focus on the daily time frame as the signals are probably the best ones on that chart at the end of day NY close. I noticed with a bearish pin bar that looked to be forming in a downtrend of the AUD/NZD yesterday about 4pm caught my eye as a perfect sell signal but I ended up cancelling my order because the bar hadn’t actually closed and infact it closed above the open price and it now looks like the pair might be starting an uptrend although I’m not 100%
When you guys look on the daily and see a signal either inside bar / pin bar / fakey setup… do you then check the 4hr chart to see if that chart has confluence with the daily trend?
No, you are in the right track! Just keep it up! But one thing, if you always wait for 50% retrace setup, then you may miss so many entry points as well!
Is there a way to tell the difference between a signal like the hanging man that looks alot like a bullish pin bar but actually is looked at as an exhaustion ignal that the trend is ending?.. are MA’s good for this?
Think about what that “hanging man” candle would look like on a faster timeframe.
Might it look like a double top or a 123 formation?
Not for predicting which way prices are about to move (for distinguishing between the two things you’re asking about), no.
That’s not what indicators are for, in this context.
But an MA, or a combination of two MAs, can be good for determing whether or not to trade the price action pattern you’re asking about, if you want to enter them only in accordance with the direction of a trend and leave them alone otherwise. Which can be a very good thing to do.
I’m not too sure about the formation side of things…think I know a double top but not a 123 etc… When i mentioned about the MA’s I meant when say there is a crossover of a 21 and 8 day EMA… and a pin bar forms still within line of the trend (not a reversal)…is that likley to be a hanging man more than a pin bar because they look very much the same.
Also just wanted to find out what the best way to trade pin bars is with (market order or stop/limit order). Mostly I’ve read people say that setting orders on the pin bar high low (as long as the signal is in line with the current trend) is better but I’ve also seen others say that market orders are better to trade pin bars that are in direction of the trend.
Support/resistant is the most useful trading instrument, I am a news trader but till now I use this tool in my live chart! By the way, I have doubt on pattern based trading. Because, many times market provide false pattern, so it’s really confusing.
There are so many others things also that you can use to improve your strategy. Depending only on support, resistance and pin bar is not any healthy way to trade.
At the moment I tend to trade pin bars that are in the direction of the trend and forming from key S/R levels with a MA for confluence. If the MA is showing strong trend movement then I know it is a higher probability trade that the market will move in the correct direction. I don;t do reversal pin bars as I think going against the trade more often than not makes you lose money unless you truly know what you are doing. I have been trying to find out if my broker CMC Markets provide OCO orders where I could place a limit order at the 50% retrace of a pin bar and also place a stop buy/sell order at the nose of the pin bar and which ever one gets filled first cancels the other order, however I’m unsure if this can be done.
