Boost Your Profits by 250% With This Forex Entry Strategy

How to boost trading profits with this Forex entry strategy

Using conventional Forex entry strategies to trade price action is no doubt lucrative. But what if I told you that there was a way to double or even triple your profits by simply using a different entry strategy?

Interested? I thought so.

The Forex entry strategy we’re going to look at today is used with the pin bar strategy. This will be the easiest and most lucrative change you can make if you’re already trading pin bars. In fact it’s so profitable that I no longer use conventional means to enter pin bar setups.

In order to truly appreciate this “other” entry strategy, let’s first review the conventional way to enter pin bars.

Conventional Pin Bar Entry Strategy

The more conventional way to enter a pin bar setup is to enter on a break of the pin bar nose. This is also the more conservative approach as you are waiting for the market to break the previous high or low.

Let’s take a look at this entry strategy.

The conservative way to enter pin bars

In the illustration above, we have a bullish pin bar that formed. The conventional entry calls for a buy stop order just above the pin bar’s nose. As always, our stop loss goes below the tail of the pin bar.

This is widely believed to be the safest way to enter a pin bar setup. It’s also the most common. However what I’m about to show you will completely change your perspective about what is “safe”.

It will also help you grasp the importance of patience when trading the Forex market – that just a few setups each month can be extremely profitable.

Let’s get started.

The 50% Pin Bar Entry Strategy

The 50% entry strategy is a more aggressive approach to entering pin bar setups. This is because we are no longer waiting for the market to break above or below the nose of the pin bar, but instead entering on a retrace.

Let’s take a look at the 50% strategy.

The more aggressive 50 percent entry strategy

Hence the name, we’re now entering the bullish pin bar on a 50% retrace. So instead of a buy stop order above the pin bar’s nose, we’re now placing a buy limit order at 50% of the pin bar’s range (distance from the low to the high).

How do you find the 50% level, you ask? Great question.

Simply drag your Fibonacci tool from the low of the pin bar to the high.

using the Fibonacci retracement tool to find the 50% level

Once you drag your Fibonacci retracement tool from the low to the high, you can easily identify the 50% level. This is the area where you want to place your limit order.

Of course, if this were a bearish pin bar you would want to drag the Fibonacci tool from the high to the low.

Now that you’re familiar with the 50% entry, let me show you why I’m such a fan of using this strategy to enter pin bar setups.

Case Study

The best way to illustrate the power of using the 50% entry strategy is to compare it to the conventional method. So let’s take a look at five different pin bar setups. We’ll trade each one using both entry strategies and then compare the results. A flat 2% will be risked for each setup.

Setup #1

The first setup we’re going to look at is a bearish pin bar that formed on the GBPNZD daily chart.

GBPNZD bearish pin bar on the daily time frame

The pair made a move below former support and subsequently retested the level as new resistance. Upon retesting the level, the pair formed a bearish pin bar.

Here’s a closer look at the setup.

GBPNZD bearish pin bar setup

Conventional entry: No entry. Unfavorable risk to reward ratio.

50% entry: 90 pip stop loss, 190 pip profit = 4.2% profit (2.1R)

Setup #2

Next, we’re going to look at a bearish pin bar that occurred on the AUDUSD daily chart.

AUDUSD bearish pin bar on the daily chart

Note that in this setup, the pair retested a former resistance level, forming a bearish pin bar. In this case, our 50% limit order wasn’t triggered.

Conventional entry: 110 pip stop loss, 350 pip target = 6.4% profit (3.2R)

50% entry: Not triggered

Setup #3

The next pin bar setup occurred on the GBPAUD 4 hour chart.

GBPAUD bullish pin bar on the 4 hour chart

The pair had been in an uptrend for three weeks prior to forming this bullish pin bar. This was the fourth touch off of trend line support, making it a favorable area to watch for bullish price action.

GBPAUD bullish pin bar from trend line support

Conventional entry: No entry. Unfavorable risk to reward ratio.

50% entry: 60 pip stop loss, 170 pip profit = 5.6% profit (2.8R)

Setup #4

This time, we’re looking at the NZDUSD daily chart. The pair had been trading within a 300 pip range before forming this bearish pin bar. You can see from the chart below that the last bearish pin bar at resistance worked out beautifully.

Let’s see how the pin bar in question worked out.

NZDUSD daily forex chart

Here’s a closer look at the failed setup.

NZDUSD bearish pin bar on the daily time frame

As you can see from the chart above, our stop loss was hit, resulting in a 2% loss for both strategies.

Conventional entry: 2% loss

50% entry: 2% loss

Setup #5

Last but not least is CADCHF. The pair had been in a downtrend for five months before forming this bearish pin bar. This was the third touch off of trend line resistance.

CADCHF bearish pin bar at trend line resistance

Here’s how we could have entered this bearish setup using both entry strategies.

CADCHF bearish pin bar at resistance on the daily chart

Once again, we face the challenge of not being able to obtain a proper risk to reward ratio with the conventional entry strategy. Only the 50% entry would have allowed us to trade this setup, and quite profitably I might add.

Conventional entry: No entry. Unfavorable risk to reward ratio.

50% entry: 70 pip stop loss, 270 pip profit = 7.6% profit (3.8R)

Conclusion

Okay, so here’s what you’ve been waiting for – the final numbers.

Setup Conventional Entry 50% Entry
 1 No entry 4.2%
2 6.4% Not triggered
3 No entry 5.6%
4 2% 2%
5  No entry  7.6%
Total: 4.4% Total: 15.4%

There you have it. Using the 50% entry strategy equates to a 250% increase in profits.

Now you may argue that these numbers aren’t accurate because I hand-picked the setups. True enough, I did pick the setups. But I also traded each and every one of them.

I could extrapolate this out to 100 trades, and the results would be similar. The 50% entry is without question superior, but only when used on quality pin bar setups.

Patience is Paramount

Like all things in the world of Forex, there will be great times, good times, okay times and bad times. But remember, becoming a consistently profitable Forex trader is a marathon, not a sprint.

Taking just five to ten quality setups per month and using the 50% entry strategy can yield a consistently rising equity curve. The key is to only take the very best pin bars setups and always maintain a proper risk to reward ratio.

The results above are in no way meant to be taken as a guarantee. However, these results are very similar to the results I experience on a monthly basis. Of course, some months are better, some are worse. But the benefits of using the 50% entry strategy clearly outweigh those of conventional methods.

I’m going to end this lesson with a somewhat controversial statement:

The 50% entry is less risky than the conventional entry strategy.

In order to properly account for risk in any scenario, you must weigh it against the potential reward. The two are neither static nor independent of one another.

Sure, a stated risk of 2% remains the same regardless of whether your potential profit is 4% or 10%. However, the dynamic risk, the one that matters the most, is constantly changing depending on the potential reward of the scenario. As the potential reward increases, your dynamic risk decreases and vice versa.

The fact that the 50% entry strategy gives us the ability to greatly increase our potential reward, it carries with it a lower dynamic risk profile than that of the conventional strategy.

As traders, we live in a world defined by risk and reward. That’s it. Once you find your trading edge, the rest of your success depends on the decisions you make regarding risk to reward. There’s no magic formula and there’s certainly no holy grail. It’s all about stacking the odds in your favor and then controlling your risk.

Your Turn

Here’s a challenge for you. Take a look at the pin bar setups you’ve traded recently and compare your results using the conventional entry strategy to that of the 50% strategy. Then come back here and post your results below.

I look forward to hearing from you.

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