Thursday, February 20, 2014

Presenting Ebisu large daily pinbar system

Finally finished backtesting large daily pinbars. The end result is good enough to trade, so the next stage is trading it live in a forward-test. I've decided to call this system Ebisu, named after the Japanese god of luck and sea merchants. 

Entry Signal

We look for a pinbar with a range greater than 1.5 * ATR(14). The open and close of the pinbar must occur within the top or bottom 50% of the candle.


Entry and Exits

We enter on the break of the pinbar's short wick, with a stop loss at the opposite end. We take profit at 0.5:1 reward:risk (or 50% the size of our stop loss). Yeah, this is an inverted R:R ratio, but the backtest showed this ratio to be optimal.

Win Rate and Profit Factor

Using a reward of 0.5R, the backtest win rate was 76.6%. The profit factor was 1.62, using my broker's costs.

Pairs Tested

Tested 18 pairs from 2001 to 2013.

Historical Equity Curve

This is an equity curve from 2001 to end of 2013, with a starting balance of $10,000, risking 2% per trade.


This is a relatively rare signal, occurring perhaps once every 1-2 months. I only found  244 signals between 2001-2013 across 18 pairs, and many of these signals appeared on different pairs during the same day. Using this system alone won't make you rich due to the infrequency of signals, but when an exceptionally large pinbar does appear, this would seem to be a good way of exploiting it.


  1. Great...
    1- is it set and forget? No sl at be?
    2- can it be applied to weekly or lower timeframes?
    3- no confluence with sr is needed?

    We have a very low drowdown here... maybe we can compensate the lower signal frequency with a more aggressive risk (4 or 5%)


  2. Hi Al. Yeah it's 'set and forget', either your SL or TP gets hit. I didn't test other timeframes. I also didn't test for confluence with S/R. You can be more aggressive if you want, but I always risk a max of 2%, and normally just 1%. :)


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