Pinbar Reversal Strategy

Pinbars highlight sudden rejections of price and can signal short-term turning points. This strategy measures the length of the candle's tail relative to its body, looking for long shadows that stick out from recent price action. A moving average filter helps trade in the direction of the underlying trend.

Testing indicates an average annual return of about 82%. It performs best in the stocks market.

During each candle update the system calculates upper and lower shadows and compares them to the body size. A bullish pinbar with a long lower wick may trigger a long entry if price is above the moving average. Likewise a bearish pinbar with an extended upper tail can initiate a short position in a downtrend. Stops are placed a fixed percentage from entry.

The trade is closed when an opposite pinbar appears against the open position or the protective stop is reached. Combining the pinbar logic with a trend filter improves reliability by avoiding countertrend setups.

Details

• Entry Criteria: Pinbar with long tail and small opposite shadow, confirmed by trend.
• Long/Short: Both.
• Exit Criteria: Opposite pinbar or stop-loss.
• Stops: Yes, percentage based.
• Default Values:
  • TailToBodyRatio = 2
  • OppositeTailRatio = 0.5
  • MAPeriod = 20
  • CandleType = 15 minute
  • StopLossPercent = 1
• Filters:
  • Category: Pattern
  • Direction: Both
  • Indicators: Candlestick, MA
  • Stops: Yes
  • Complexity: Intermediate
  • Timeframe: Intraday
  • Seasonality: No
  • Neural networks: No
  • Divergence: No
  • Risk level: Medium