Pin Bar Reversal at Key Level

Entry Logic

• Exact entry trigger: Buy on a break above the high of a bullish Pin Bar, or sell on a break below the low of a bearish Pin Bar.
• Confirmation requirements: A candle with a long wick (at least 3x the body size) and a small body. The wick should be rejecting a key support or resistance level.
• Timeframe required: Any timeframe, but more reliable on higher timeframes.
• Location context: At a key support or resistance level.
• Market condition requirement: A trending market pulling back to a key level, or a range-bound market at the extremes of the range.

Exit Logic

• Profit target(s): The nearest support or resistance level.
• Scaling out rules: N/A.
• Trailing stop rules: Use a fast EMA.
• Exit on signal failure: A close on the other side of the Pin Bar's body.
• Exit on opposite signal: A strong reversal pattern.
• Exit on time expiration: N/A.
• Exit on momentum loss: N/A.

Stop Loss Structure

• Hard stop location: Beyond the end of the Pin Bar's wick.
• Soft stop rules: N/A.
• Maximum dollar loss per trade: 1% of capital.
• Maximum percent loss per trade: N/A.
• Structural stop placement: Beyond the key level being rejected.

Risk Management Framework

• Risk per trade: 1%.
• Maximum daily loss limit: 2%.
• Maximum weekly loss limit: 5%.
• Maximum drawdown allowed: 15%.
• Risk-reward ratio requirement: 1:2.

Position Sizing Model

• Recommended sizing approach: Fixed risk.
• Volatility-based adjustment: The length of the wick determines the risk, so position size is adjusted accordingly.
• Conviction-based sizing (A+/A/B setup): A+ for a Pin Bar at a major weekly support/resistance. A for a Pin Bar at a daily level. B for a Pin Bar at an intraday level.
• Scaling in rules: N/A.
• Scaling out rules: N/A.

Trade Filtering

• Market conditions to avoid: Choppy markets where Pin Bars can be frequent and unreliable.
• Specific setups required: A clear Pin Bar at a key level.
• Stock/instrument requirements: Any liquid instrument.
• Time of day restrictions: N/A.
• Chop/news avoidance rules: N/A.

Context Framework

• Trend direction assessment: The trade is taken in the direction of the rejection.
• VWAP relationship: N/A.
• Moving average relationship: The Pin Bar can be rejecting a key moving average.
• Range location: At the top or bottom of a range.
• Higher timeframe alignment: The rejection should align with the higher timeframe trend.

Trade Management Rules

• When to move stop to breakeven: After a 1R move.
• When to scale out: N/A.
• When to add size: N/A.
• How to handle fast moves vs slow moves: Let it run.

Time Rules

• Optimal trading window: N/A.
• Times to avoid: N/A.
• Session-specific notes: N/A.

Setup Classification

• A+ setup criteria: A very long-wicked Pin Bar at a major S/R level, with a high-volume breakout.
• A setup criteria: A Pin Bar of average size at a minor S/R level.
• B setup criteria: A Pin Bar with a shorter wick.
• C setup criteria (avoid): A Pin Bar in the middle of a range.

Market Selection Criteria

• Instrument requirements: Any liquid instrument.
• Volume/liquidity requirements: High volume.
• Volatility requirements: N/A.

Statistical Edge Metrics

• Expected win rate: 60-65%
• Average win size: 2.5R
• Average loss size: 1R
• Profit factor: 1.8 - 2.2
• Expectancy per trade: 0.6R.

Failure Conditions

• Market conditions where strategy fails: In strong, trending markets that break through key levels.
• Specific scenarios to avoid: A Pin Bar with a small wick.

Psychological Rules

• Key mental discipline requirements: The ability to trade against the recent momentum.

Advanced Components

• Market regime detection: N/A.
• Volatility/liquidity filters: N/A.
• Correlation filters: N/A.
• Multi-timeframe alignment: The rejection should be in the direction of the weekly trend.

Location

• Where this setup is strongest: At major S/R levels.
• Where this setup is weakest: In the middle of a range.
• Location changes outcome: Yes.