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Trading Pin Bars – Love Hate Relationship

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Trading pin bars is often a price action approach which have been used in a Forex trading strategy. Coming from a daily chart with an intra-day trading chart, pin bar trading is often a popular approach utilized by traders looking to identify a reversal out there using price action.

From neat names like shooting star and hammers (even hanging man), pin bar candlesticks give you an exact trade entry and stop loss that you can use when placing a trade.

What Are Great About Pin Bars

Unlike chart patterns (sometimes called chart art) that can be different from trader to trader and even lack consistency with a trader, pin bars are easy to spot.

PIN BARS

PIN BARS

Any trader could instantly look at their chart and notice these two different candlesticks.  You can notice the long shadows on each of them as well as the obvious body of the candlestick.

  1. This would be a bullish reversal candlestick and while this body is green, it could also be red and have the same meaning.  Traders may look at a red bullish reversal as less convincing
  2. This a bearish reversal candlestick.  The main different is the location of the shadow – on the top of the body of the candlestick.

Trading with pin bars will give you exact entry location and stop loss locations:

stops and targets

STOP AND TARGETS

When a pin bar occurs in the location of interest, you can place an order to:

  • Buy the market by placing your entry at the black line of the bullish reversal candlestick
  • Sell the market by placing your entry at the black line of the bearish reversal candlestick

Our stop loss is the exact opposite end of the pin bar as noted by the red lines.  Please note that you should never place it directly beyond the shadows.  Allow yourself some buffer room in case price probes the area.

Pin Bar Trading Strategy At Levels

Pin bars are going to appear every place on your chart but not all of them are worthy of a trade.

I would only look for pin bars at important structure locations on the chart such as support and resistance zones and even Fibonacci levels.  The great thing about this strategy is you will be forced to be disciplined in your trading approach.

PIN BAR TRADING EXAMPLES

PIN BAR TRADING EXAMPLES

Looking at this chart, the first arrow points to a pin bar that came into the .618 Fibonacci level.  Do you remember how you would enter the trade on the pin bar?

  1. Your entry price would go just over the high of the reversal pin bar
  2. Your stop loss would go some pips (in this case) below the lower shadow

The 2nd arrow shows the best pin bar entering the location from the first pin bar. We are considering the very first pin bar providing us the potential support degree. Once the actual pin bar turns up, you’d make use of the entry and prevent loss strategy we curently have covered.

This pattern will repeat itself on every instrument and every time frame.

TIP:  These types of candlesticks display a trend reversal also it could simply be considered a corrective proceed (down trend upon lower period frames) so you might want to trade toward the main price motion trend. You should use a moving average or the cost trend structure to look for the trend path.

The Worst Part Of A Pin Bar Strategy

While there are lots of pluses regarding trading pin number bars, there is actually one drawback that you need to pay focus on.

Remember how the shadows can provide us goal places to place our cease loss. The cease loss is determined by the overall period of the shadow from the pin bar. When the shadow in the event that very long, you’ll be forced to possess a wider cease which can lead to a scaled-down position dimension.

On the 5 moment chart, that might not be a large deal. If you’re swing trading a regular chart, we’re already taking a look at a bigger range and when the pin bar provides huge darkness, you might be increasing the actual average visit many pips.

But you must do that.

Trades is going to be invalidated once the lows or even highs from the shadows are removed by a great measure.

Inside a Forex trading strategy, you have the choice of utilizing odd great deal sizes however in markets for example Futures, you are restricted to how big the e-mini agreement. You might have to sit apart on a few trades which have large pin bar dark areas.

Longer dark areas, depending promptly frame, might be showing a person an tiredness move along with a strong rebound is usually coming. Try to get involved with these utilizing proper danger management.

My Trading Experience With Pin Bars

We don’t just locate a pin bar from support and/or resistance area when i have numerous tools I will use in order to enter the trade. For any newbie trader or perhaps a trader just seeking to simplify and steer clear of over trading, pin bar strategy is a great one to check out using.

I search for pin pubs in blockage areas when it comes to probes close to support as well as resistance areas that really help determine that force, bulls or even bears, are likely to take the marketplace. It’s not really perfect however the shadows tend to be great to determine who is actually in manage.

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