Pinbar trailing stop strategy

The Pinbar trailing stop strategy indicator automates the detection of pinbar candlestick patterns to execute trades with customizable risk-management parameters, including dynamic trailing stops.

Usage

The Usage section describes how the script can be used to identify trend reversals or continuations through pinbar patterns. A long position is initiated when a bullish pinbar is detected, while a short position is initiated upon a bearish pinbar. Users can define specific multipliers to set exit targets based on the volatility of the signal candle.

Trade Management

The script allows for flexible exit logic. Users can choose between fixed limit orders or trailing stops. The trailing stop feature is designed to lock in profits as the price moves in the favorable direction after reaching a specified threshold. Additionally, the strategy can be configured to close existing positions if an opposing signal occurs, ensuring the user is always aligned with the most recent price action signal.

Details

The script identifies pinbars based on the relationship between the candle body and its total range. For a bullish pinbar, the body must reside in the upper 30% of the candle's range, and the low must be lower than the previous bar's low. Conversely, a bearish pinbar requires the body to be in the lower 30% of the range, with a high exceeding the previous bar's high.

The exit levels are calculated using the "signal candle" size (High - Low). The Take Profit is determined by multiplying this size by the user-defined Profit Multiplier, while the Stop Loss uses the Loss Multiplier. When trailing stops are enabled, the strategy.exit function monitors the trail_price to adjust the exit point dynamically.

Settings

Profit options

• Profit multiplier: Sets the target price as a multiple of the signal candle size relative to the entry price.
• Loss multiplier: Sets the stop loss level as a multiple of the signal candle size relative to the entry price.

Trading options

• Use trailing stops?: When enabled, converts the take profit level into a trailing trigger to capture extended trends.
• Close trade if opposite signal occurs?: If enabled, a long trade will close immediately upon a bearish pinbar signal, and vice versa.
• Enter long trades?: Toggles the execution of bullish entry signals.
• Enter short trades?: Toggles the execution of bearish entry signals.

Backtest Time Period

• Begin Backtest at Start Date: Enables a filter to restrict trade execution to a specific timeframe.
• Start Date: Defines the exact date and time the strategy begins processing signals for backtesting.

FAQ

How do I identify a valid signal on the chart? The script plots a green up-arrow below the bar for bullish pinbar signals and a red down-arrow above the bar for bearish pinbar signals.

Can I use this for automated trading? Yes, the script includes alert conditions for both bullish and bearish detections which can be linked to external execution bridges.

How can I access the Pinbar trailing stop strategy? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.