Pinbar strategy backtest
In this article you will learn the various aspects of the Pin Bar Trading Strategy used during a Pin Bar momentum break. This is the 2nd article in the Momentum Trading Strategy series.
The first one can be found here: Outside Bar Momentum Strategy. The candle just needs to meet two conditions when it closes:. It must be a Pin Bar — this is a bar with an open and close that are both in either the top quarter of its range, or the bottom quarter of its range.
If the Pin Bar closes in the upper quarter of its range, its low must be lower than the low of the previous 4 candles.
If the Pin Bar closes in the lower quarter of its range, its high must be higher than the high of the previous 4 candles. If the bar closes in the upper quarter of its range, if we are using the Pin Bar Trading Strategy we are looking for its high to be exceeded by at least one pip by the very next bar, and at this price we enter long. However if the price trades below the low of the Pin Bar before this happens, the entry is not taken. If the bar closes in the lower quarter of its range, we are looking for its low to be exceeded by at least one pip by the very next bar, and at this price we enter short.
However if the price trades above the high of the Pin Bar before this happens, the entry is not taken. Examples of entries and stop loss placements in Pin Bar trading are shown below:. Note that both the open and the close are in the top quarter of the candle.
The long entry order is shown by the dotted green line, 1 pip above the high of the candle that has just closed.
The stop loss is shown by the dotted red line, 1 pip below the low of the candle that has just closed. The order must now be triggered by the next candle, before the red line is hit.
Note that both the open and the close are in the bottom quarter of the candle. The short entry order is shown by the dotted green line, 1 pip below the low of the candle that has just closed. The stop loss is shown by the dotted red line, 1 pip above the high of the candle that has just closed. The stop loss is simply placed one pip beyond the other side of the candle. If the trade is long, it is placed one pip below the low of the candle.
If the trade is short, it is placed one pip above the high of the candle. Regarding Profit Targets and Issues, the information given on Page 7 for Strategy 1 is also applicable here.
A Pin Bar may indicate the sudden rejection, with momentum, of a particular price level or zone. The open close of the Outside Bar in either the top or bottom quartile, and the breaking of that quartile during the next bar before the other side is broken, are further indications of strong momentum in the direction of the trade.
The testing was conducted on only the 1 hour and 4 hour time frames. The historical data used ran from 1st November to 30th October London time was used and is given in the results.
During half of the year, London time and GMT differ by 1 hour. Signals were few and on this time frame are better considered strongly on their individual merits. For these reasons, no results are given here. The hypothetical results seem to be disappointing. We have a fairly large sample of trades overall and the winning percentage is just a shade above random.
This is a rare trade, but historically has performed well over the past decade.
I find these results plausible as the filter helps to identify relative impulsiveness of new moves which tend to be reversals. Of the candles closing at 8am GMT, I find this result plausible as it coincides with the final part of the Tokyo session and the opening of the London session which can provide the impetus for a move. Taking all the highlighted trades on the H4 timeframe in total, this would have produced a positive hypothetical expectancy of An average of about 8 trades was triggered per year, about 0.
We have a very large sample of trades overall and the winning percentage is effectively random. After applying the time of day filter, the only hypothetical result worth highlighting came from the 56 trades that were triggered between 2am and 3am London time, coinciding with the Tokyo open.
I do not see this as a meaningful result as there is nothing significant happening at this time. The significant gap between the long and short trades is concerning, so this should be refined further.
Part 1: 4 Hour Pin Bar Forex Strategy | » Learn To Trade
It should also be noted that with a much larger sample size, all the trades taken during the London session excluding its first hour i.
This could be a plausible result. However, as can be seen, the gap between long and short trades is huge, so I do not find it reliable. After applying the time of day filter, the only hypothetical result worth highlighting came from the 75 trades that were triggered between 8am and 9am London time, coinciding with the London open.
This is a significant result as it coincides with the beginning of the most important session in which this pair is traded. The hypothetical result above can be filtered effectively and logically by restricting entry times to between 8am and 5pm London time, improving the winning rates of both long and short trades as shown in the hypothetical results below: These are significant results as the filters identify momentum and impulsiveness and restrict trades to the predominant London session.
This is not good enough to be of interest. Taking all the highlighted trades on the H1 timeframe in total, this would have produced a positive hypothetical expectancy of An average of about 22 trades was triggered per year, just under 1.
Click here to read it. Overall, the results show that volatility and time of day are important factors in determining market movement predictability after candlestick patterns. Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch.
5 Minute Pinbar and Value Chart Strategy - 5 Minute Strategies - Binary Options Edge
He is certified in Fund Management and Investment Management by the U. Learn more from Adam in his free lessons at FX Academy.
Registration is required to ensure the security of our users. Login via Facebook to share your comment with your friends, or register for DailyForex to post comments quickly and safely whenever you have something to say. Log in Create a DailyForex. Want to get in-depth lessons and instructional videos from Forex trading experts?
Register for free at FX Academy, the first online interactive trading academy that offers courses on Technical Analysis, Trading Basics, Risk Management and more prepared exclusively by professional Forex traders. DailyForex will not be held liable for any loss or damage resulting from reliance on the information contained within this website including market news, analysis, trading signals and Forex broker reviews. The data contained in this website is not necessarily real-time nor accurate, and analyses are the opinions of the author and do not represent the recommendations of DailyForex or its employees.
Currency trading on margin involves high risk, and is not suitable for all investors.
As a leveraged product losses are able to exceed initial deposits and capital is at risk. Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite.
We work hard to offer you valuable information about all of the brokers that we review. In order to provide you with this free service we receive advertising fees from brokers, including some of those listed within our rankings and on this page.
While we do our utmost to ensure that all our data is up-to-date, we encourage you to verify our information with the broker directly. Forex Reviews Forex Brokers Reviews Bitcoin Forex Brokers ECN Forex Brokers US Forex Brokers UK Forex Brokers Canadian Forex Brokers Australian Forex Brokers Singapore Forex Brokers South Africa Forex Brokers Islamic Forex Brokers Regulated Forex Brokers MT4 Forex Brokers Mobile Trading Brokers Social Trading Platforms.
Oil Trading Brokers Gold Trading Brokers NFA Regulated Brokers Automated Forex Trading More In Reviews Forex Brokers By Type Forex Signals Reviews Forex Products Reviews Forex Courses Reviews Forex Brokers Bonuses Binary Options Brokers Full Brokers List. Forex News Technical Analysis Fundamental Analysis Trading Mind Blog Forex Blog Financial Humor Forex Expo Forex Newsletter More Technical Analysis Weekly Forex Forecast Free Forex Signals Gold Price Forecast.
Analysis By Pair EUR-USD USD-JPY GBP-USD USD-CHF USD-CAD AUD-USD Bitcoin-USD Gold Oil. Learn Forex at FXAcademy Forex Articles Binary Options Trading Forex Social Trading Guide Forex Glossary Forex Basics Forex Webinars Forex Regulations. DailyForex Mobile App Need Help Choosing a Broker? Report Broker Scams Forex Widgets Sitemaps. Forex Articles Momentum Trading Strategies Using Pin Bar Trading Strategy in Momentum Trading Using Pin Bar Trading Strategy in Momentum Trading. The candle just needs to meet two conditions when it closes: Examples of entries and stop loss placements in Pin Bar trading are shown below: Stop Loss The stop loss is simply placed one pip beyond the other side of the candle.
Pin Bar Trading Strategy Justification A Pin Bar may indicate the sudden rejection, with momentum, of a particular price level or zone. STRATEGY 2 — PIN BAR MOMENTUM BREAK: Daily Time Frame Signals were few and on this time frame are better considered strongly on their individual merits. H4 Time Frame The historical data used ran from 1st November to 31st October The hypothetical results were as follows: H1 Time Frame The historical data used ran from 1st November to 31st October Adam Lemon Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch.
Sign Up Read Review. Free Forex Trading Courses Want to get in-depth lessons and instructional videos from Forex trading experts?
Sign up to get the latest market updates and free signals directly to your inbox. Most Visited Forex Broker Reviews. About Us Contact Us. Enter your email address here: