Inside bars & pin bars

Inside bars & pin bars

(Unless you are trading foreign currencies, this post won’t make much sense. You should just skip this and move one…)

In the past few months I’ve been looking at trading foreign currencies. I’ll save some of the details of the mechanics (why, how etc) for another day.

For myself, one of the most successful entry indicators is an Inside Bar + Pin Bar.

I’m using FXDD, which is based on the Meta Trader platform. One of the benefits is that you can create your own indicators.

So, I created an Inside bar & Pin bar. Here’s the steps:

  1. Download the file Inside Bar.txt. You will need to rename it from .txt to .mq4. Save it in experts\indicators folder. If you have installed FXDD in the default location, this will be C:\Program Files\FXDD – MTXtreme 4\experts\indicators
  2. Click on Tools / MetaQuotes Language Editor
  3. On the Navigator window, expand the Indicator folder and double click ‘Inside Bar.mq4’. If you can’t see the Navigator window, from the menu, select View / Navigator
  4. Click Compile. In the results window (down the bottom) you should see 0 errors, 0 warnings. If not, then it is likely something you have changed.
  5. Click Tools / Trading Terminal, to switch back to your chart
  6. Select the chart you want to see the indicator on. Click Insert / Indicators / Custom / Inside Bar
  7. Repeat steps above with PinBar.txt

You can see in the examples above, an inside bar has a tick above the bar and the pin bar is a ^ below.

Taking your losses…

Taking your losses…

On Friday afternoon Lihir Gold traded above $3.90 and looked like it could hit $4.00.

It was one of those funny things that in the back of my mind it really sounded too good to last…

Guess what happened today? (click on the image to see the full chart)

lgldepth20080104.gif

I had been scaling in my position as was over exposed. Luckly I got out quickly (did I mention the value in a Stop Loss?).

I met a great person on the weekend who would say “what is the blessing?” (if you are not spiritual, then you should ask yourself, what is the lesson?)

I have noticed that I do get a little caught up in these things. Remember, I did enter at $3.28. If I ever write a book on Trading it will be called “Emotional Mastery” because before you can trade well, you must master your emotions…

Rock on!

Lihir Gold

Lihir Gold

Continuing on with Market Depth, I am still long Lihir Gold.

lgldepth20071224.gif

Merry Christmas!

Market Depth

Market Depth

Whenever I’ve read anything on Technical Analysis, I regularly come across Support and Resistance.

From Wikipedia:

Support

A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to “bounce” off this level rather than break through it. However, once the price has passed this level, even by a small amount, it is likely to continue dropping until it finds another support level.

Resistance

A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to “bounce” off this level rather than break through it. However, once the price has passed this level, even by a small amount, it is likely that it will continue rising until it finds another resistance level.

To me, this is similar to Head and Shoulders, Moving Averages or Stockastics. While I will use these types of indicators to put a stock on my watchlist, I would never use these as a Buy or Sell trigger.

My preference is always Market Depth. This is what I saw when I pulled up Lihir Gold.

LGL Market Depth 200712211211

Whenever I’m looking at Market Depth, I always do some very rough math. At the first level (3.28/.29) there are about 2/3 sellers.

At the 2 levels, it roughly even (just as many buyers as sellers), at the 3rd level, its almost 3 times.

This screenshot was taken today at a little after midday.

The next one is the same stock, an hour later:

LGL Market Depth 200712211312

Ok so a quick look here.  At the 1st level, there are over twice as many buyers as sellers.  And that story continues all the way down…

So what does tell us?  I’m going long LGL!

What to look out for…

AWB…

Now with all the Oil for Food enquiry etc. etc. etc. I just can’t see this stock going anywhere except south!

If you look at it over the last couple of months that is exactly where its gone! But if you look at the daily there is a LOT of volume.

 

So SOMEONE is propping up that puppy! What does that mean to us? Well, I wouldn’t be putting my super fund in it, but there could be some good short term trading there…

I’m going to keep an eye on it…

́

Week in review…

So, how did you go?

 

Code Buy Date Buy in Stop loss Close 24/11/06 Percent
BIL 19/11 12.92 12.53 12.9 -0.4%
WAN 19/11 10.76 10.37 11.91 10.4%
FXJ 20/11 4.94 4.75 5.07 2.4%
FGL 21/11 6.5 6.33 6.89 5.8%
BBG 22/11 15.81 15.54 15.7 -0.8%
TTS 22/11 3.74 3.63 3.8 1.4%

Overall that gives us a total of 18% and an average of 3.1%

Not bad considering the most you would have lost was less than 1%!

And THAT was in 5 days…

 

I like to wipe the slate clean and start again, but if you had these stocks, you sure as hell would keep them! (Especially WA News (WAN) )

Good hunting!