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1-To-1 Pinbar Scalping Forex Trading Strategy

This document describes a 1-to-1 pinbar scalping strategy for forex trading. It involves entering trades based on bullish or bearish pinbar candlestick patterns that form in the direction of the long-term 200-period EMA. Trades are entered on the close of qualifying pinbars, with stop losses placed at the pinbar high/low and take profits set at 1x the risk amount. While not a high probability or reward strategy, it allows traders to take many trades per session and rely on statistics and volume to generate profits over time.

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570 views9 pages

1-To-1 Pinbar Scalping Forex Trading Strategy

This document describes a 1-to-1 pinbar scalping strategy for forex trading. It involves entering trades based on bullish or bearish pinbar candlestick patterns that form in the direction of the long-term 200-period EMA. Trades are entered on the close of qualifying pinbars, with stop losses placed at the pinbar high/low and take profits set at 1x the risk amount. While not a high probability or reward strategy, it allows traders to take many trades per session and rely on statistics and volume to generate profits over time.

Uploaded by

Nithiyanantham Bcomca
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1-To-1 Pinbar Scalping

Forex Trading Strategy

There are two aspects of a trade entry that should be


considered, first, the trade direction, then the entry itself or
the timing of the entry.

Both are equally important, but one is trickier than the


other.

First, trade direction. Trade direction refers to whether you


would be buying or selling.

This is determined on whether you think price would go up


or down. This is very important.

If you get this wrong, then the whole trade would already be
wrong, and it would be very hard to salvage that trade.
However, this is a bit easier to decipher.
In fact, majority of traders get this right. It’s the second
thing that usually messes up a trader’s profitability.

So, what about trade entry and timing? Why is it so hard to


determine?

This is because, when in trade direction, you only have two


options, up or down, in timing the entry, you’d have many
different options, in fact, each tick that the market makes is
an option.

Not only is it difficult, it is also critical in order for a trader to


have a positive reward-risk ratio.

Those who haven’t got the skill of timing an entry down


often resort to hedging strategies that are a bit risky and
doesn’t allow a trader to predetermine the risk.

Indicator Based Entry Timing Versus Candlestick

Pattern Based Timing

There are many different ways to time an entry. It could be


based on whether price reached a certain area or breaks out
of one.

It could be based on patterns or it could be based on a


specific set of rules.

But I think there are a couple of ways to time a trade that


could be very specific, it seems surgical.

One way would be based on a confluence of reversal


conditions coming from indicators.
It could be a crossover of an oscillator, an overextended
market scenario, Heiken-Ashi reversal, etc.

This is a great way to surgically time an entry because it


takes subjectivity of decision away from the trader.

Every decision is based from an indicator, which is


mathematically derived from price movement itself.

This allows us to statistically test whether our entry works


or not.

The setback though is that it often is a bit more lagging


compared to observing price movement itself.

Another way to time entries would be through the use of


candlestick patterns.

There are candlestick patterns that have been proven to


have a positive expectancy of yielding a profitable trade.

One of the most popular is the pinbar pattern.

A pinbar is basically a reversal candlestick pattern with a


small body and a long wick.

The long wicks signify price rejection.

Whichever way the wick is pointing, the market is rejecting


that price.

Whichever way the small body is on, the market might be


going towards that direction.
Below is an example of a bearish pinbar with a long wick on
top.

Next, we have an example of a bullish pinbar with the wicks


below.
Trade Strategy Concept

Knowing that pinbars are commonly recurring, higher


probability reversal patterns, we will be trading based on
this strategy and allow the probabilities of this pattern to
work on our favor.

But we can’t take just every pinbar pattern that presents


itself.

We will have to filter it based on the general direction of the


longer-term trend.

So, we will be trading pinbars that agree with the direction


of the market based on the 200-period Exponential Moving
Average (EMA).

What this does is that it allows us to take trades just as the


market is about to end a short-term retracement on a
long-term trend.

Also, since we are relying solely on the pinbar and the


long-term trend, it might be good to have conservative
targets for a scalp.

We will have a 1:1 reward-risk ratio based on our stop loss


and take profit targets.

Timeframe: 1-minute, 5-minute, and 15-minute chart

Currency Pair: any major currency pair

Session: Tokyo, London and New York session

Buy Trade Setup


Entry

 Price should be above the 200 EMA (gold) indicating a


long-term bullish market
 Enter a buy market order on the close of a bullish
pinbar

Stop Loss

 Set the stop loss at the low of the candle

Take Profit

 Set the target take profit at 1x the risk on the stop


loss
Sell Trade Setup

Entry

 Price should be below the 200 EMA (gold) indicating a


long-term bearish market
 Enter a sell market order on the close of a bearish
pinbar

Stop Loss

 Set the stop loss at the high of the candle

Take Profit

 Set the target take profit at 1x the risk on the stop


loss
Conclusion

This is not a high reward-risk strategy as we are limiting it


to 1:1.
This strategy is also not a high probability strategy because
its entry is based on a confluence of only two conditions.

Where this strategy shines however is in the volume of


transactions that you could have and that is very important
for scalpers who take minimal profit per trade.

This allows for the statistics to work on our favor.

It would be very tedious and brutal at times, but the law of


large numbers could be on your side.

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