How To Trade Pin Bars

The Pin Bar Trading Strategy

The pin bar candlestick pattern is really distinct compared to the many other types of candlestick patterns. Some might argue that the pin bar pattern is similar to that of the hammer or the inverse hammer candlestick pattern. In the next section of this article, we deconstruct the pin bar candlestick pattern and explain the meaning behind this candlestick pattern. A good pin bar cannot be named as ‘bad’ just because your stop loss is close.

The reason I titled this section exit “plans” and not exit “strategies” is because I want it to be clear that you must have an exit plan before entering a pin bar trade, or any trade for that matter. The saying, “plan your trade and trade your plan” could not be more true for those who have found success in the Forex market. Entering on a break of the pin bar nose involves placing a stop order just beyond the nose of the pin bar. In the example above, we would place a sell stop just below the pin bar nose. The distance at which you place the order is really personal preference and depends on the currency pair traded, but a good rule of thumb is 5-10 pips.

The Pin Bar Trading Strategy

As you know, successful forex trading is not only about identifying different patterns on the chart. We must know how to take advantage of the different chart patterns and incorporate a strategy around it. The pin bar trading strategies presented here aimed to show a simple approach to technical analysis. Nowadays traders use sophisticated trading strategies to come up with less productive trades.

I am looking forward to your next lesson on entry and exit pin point strategy. I am really struggling to identity the right place to enter and exit a position. Im also unsure about the pin bar as a continuation pattern with no pullback, as the pin bar here does appear to pull back and reject the previous resistance. The reversal pin bar is best played in a ranging market or on a pullback within a larger trend.

Trading Pinbars With Fibonacci Levels

Understanding why they are important for order flow and market dynamics goes a long way in ensuring you use this effective pattern to its full effect. Within candlestick The Pin Bar Trading Strategy patterns, perhaps the most common and widely used pattern is the hammer or the pin bar, one of the most effective patterns to denote market turnarounds.

Because the trades resulted from the pin bar trading give tremendous risk-reward ratios, a stop-loss being hit doesn’t affect the trading account. Plus, money management requires an appropriate balance between the size of a trade and the timeframe.

Once you’ve identified a pin bar has formed in the market the next thing to do is enter your trade. It means the when you see such a bearish pin bar formation, you should be very alert that the bears are now most likely taking over the market and will continue to push price down. Today is my FIRST DAY as a member; as I read & study Price action w/ the pin bars and Confluence, I am identifying Pin Bars in the AUDUSD 240min live chart. • A bullish reversal or bottom reversal pin bar formation can be called a “long wicked hammer”, “long wicked doji”, or “long wicked dragonfly”.

And then decide where the retracement entry would make the more sense (could be 33%, 60% or even 75%). Today I am going to show you an easy and fast way to trade pin bars. I usually take a longer expiry in binary options like 15 min or 20 min.

This rush causes the trader to become emotionally involved with their position, which heightens the risk that they may make some kind of snap decision whilst monitoring their trade. We’re going to take a look at how this pin bar was constructed on the 5 minute chart, so you can see where the up-move which caused the pin bar to form originated from and the point where the market broke it. Here’s an example of a 4 hour bearish pin bar which had it’s body close into the body of the bullish candlestick that formed the hour before. In the image above you can see I’ve marked a bullish pin bar with an X. If you already know how to place stops losses, the only thing you need to learn is the location of where you put your stop when placing a pin bar trade, which is what I’m going to show you now.

Now these pin bars also, just like the last one, also have the momentum The Pin Bar Trading Strategy in their favor. They’re also well-formed pin bars with nice long tails.

  • For one, depending on where the pin bar is actually located on the chart, it could be an indication of price hitting a large block of opposing orders.
  • Unlike a more ‘rounded’ action comprising of multiple candlesticks, a pin bar will often engrave the foundations of the reversal within the wick itself.
  • That is because price essentially was able to initially head in the direction of the trend and then fall just as much within the candlestick period alone.

How To Trade With The Best Pin Bar Pattern Indicator?

All of these methods can work within the right system and be an advantage to your overall approach (just don’t plan on getting rich by trading pin bars by themselves). You can enter when price breaks the closed pin bar candle.

What Is The “Pin Bar”

The Pin Bar Trading Strategy

But there’s one other factor here that really makes these two pin bars a great setup and that is this key level. And the reason I like this level better than the last one is simply because we have three touches.

Not knowing the whole picture about the pin bar strategy. If you find any pin bar in the smaller time frame during the high impact news release than its better to avoid it since lots of false signal is The Pin Bar Trading Strategy generated in the market prior to heavy impact news release. CFDs are complex financial instruments traded on margin. Trading CFDs carries a high level of risk and may not be suitable for all investors.

I see possibilities all the way, im so enlightened and excited about trading forex. Even as a The Pin Bar Trading Strategy young trader I have quickly realize that the best way to trade the market is by price action.

As for my experience, this strategy works not only on classic larger timeframes as H4, D1 and higher but also on the small M5, M15. The difference will be in the size of the potential profit and the time of the lifespan position. When trading on D1, an open position may last for several months. There is a good deal of indicators meant for a better definition of candlestick patterns on the chart.

The example above on the left reflects the best kind of pin bar, with its tail rejecting an independent price after a pullback. However, although the example on the right has pin bars – they are in a choppy range and it is more likely that we will get stopped out as the tail is not rejecting an independent price. I agree, it is definitely more of a indecision candle than it is a pin bar, will change it now. Here’s an example of a bearish pin bar which formed on the 1 hour chart of EUR/USD. Here’s an image of bullish pin bar that formed on the 1 hour chart of USD/JPY.

Always remember that one or two, or even more, losing trades don’t tell the whole story . Consistency is what makes a good trader along with practice and discipline. Make one small tweak at a time, don’t throw the strategy The Pin Bar Trading Strategy out because you had a bad run. Which of the methods you decide to use all depend on how comfortable you are with Pin Bars after practice and what other strategy components you are using to build your trading approach.