Pin Bar Strategy – How To Trade It

 

Today we kick off our three-part series on price action analysis by taking a close look at the pin bar strategy and how to trade it. We’ll first  define the pin bar take a look at its anatomy and  then show illustrations of how to trade pin bar setups But first:

A Little Introduction To The Pin Bar Strategy

The pin bar pattern represents a  strong rejection and reversal of price.  The rejection usually occurs at a very crucial stage in market activity. The good news is once you familiarize yourself with this pattern you stand the chance of laughing all the way to the bank. The first question we need to ask ourselves is:

What Is a Pin bar?pinbars

Well, the pin bar is a thin bar with  the following attributes:  a long upper or lower tail, wick or shadow, and a smaller body or real body. The pin bar also belongs to the candlestick family(We’ll touch on candlesticks real soon)- very popular with forex traders because they’re easy on the eyes as far as price action goes.

 

Anatomy of the Pin Bar pinbar-anatomy

  • The  pin bar has a long tail or wick as it’s popularly known.. As indicated in the above graphic,  the tail is the pointed part of the bar that resembles a tail and which indicates rejection or false break of a level.
  • The body represents the area between the open and close of the pin bar. And it’s usually colored white or another color, when the closing price is higher than the open price. However, if the body color changes to a darker color, or some other color, then the closing price  becomes lower than the opening price.
  • The open and close of the pin bar should be close to or equal to the same price.
  • The tail, popularly known as the shadow protrudes fr
  • The tip of the tail is referred to as the nose.
    • The  pin bar has a long tail or wick as it’s popularly known.. As indicated in the above graphic,  the tail is the pointed part of the bar that resembles a tail and which indicates rejection or false break of a level.
    • The body represents the area between the open and close of the pin bar. And it’s usually colored white or another color, when the closing price is higher than the open price. However, if the body color changes to a darker color, or some other color, then the closing price  becomes lower than the opening price.
    • The open and close of the pin bar should be close to or equal to the same price.
    • The tail, popularly known as the shadow protrudes from the  other bars. For your sakes, you’ll be better off with a longer bar a

Now we’re gonna see illustrations of how to trade pin bar setups with respect to bullish and reversal  formations.

Bullish Reversal Pin Barbullish-pinbar

In a bullish reversal set up, when the pin bar’s tail points down, it suggests rejection of prices or a level of support(either support or resistance).  This triggers an upward trend or rise in price, and when that happens, it’s time to make a buying trade.

Bearish Reversal Pin Bar

The pattern on the right of the bullish reversal pin bar is the bearish reversal pin bar. This the complete opposite of the bullish reversal pin bar. Here prices are rejected at the level of support, resulting in a  drop in price. This triggers a downward pattern, and when that happens, it’s time to sell.

 

How To Trade Pin Bar Strategy

If you want to make serious money with the  pin bar strategy, make sure it’s well defined. Refer to the characteristics  of the pin bar we discusssed earlier if you find yourself in sixes and sevens.Why do I say so, because not all pin bar patterns look the same. So it pays to trade the pin bar patterns that satisfy the above characteristics. But just to clear any clouds swirling in your head, let me show you what a defined pin bar looks like.

def-pinbar

This is a pin bar formation in a downtrend. As the two arrows sugest, the pin bar has a long narrow wick and a small body. So keep that in mind when looking out for  the pin bar pattern.

Also,make sure that you trade pin bars that display confluence with another factor.  Sure, some of you are scratching your heads like “What does he mean by confluence.Well, confluence is where tow or more levels come together on the chart.  On    The alignment of these levels creates opportunities for trade signals. A classic example of pinbars displaying confluence is at the support level where you have multiple trade signals long the line of support. Let me show show you a classic  example of confluence of factors along the line of support

03-Using-Pin-Bar-Price-Action-Trade-Forex-Confluence-1024x480 (1).png

This,ladies and gentlemen, is a classic example pin bars displaying confluence with another factor along the lines ofsupport and resistance. The three arrows represent trading signals along these two lines. When such a convergence, occurs,  prepare to ring the cash register.If you want to  sink your teeth further in multiple confluence of factors  stop by  my Something Called Multiple Confluence of Factors Post.

 

That’s a wrap on “Pin Bar Strategy – How To Trade It.” Tomorrow we’ll touch on the second of our trade setups- Fakey Set Up. I’m sure you’re looking forward to that. Till next time take care.

Interested in getting into price action trading and a career in forex trading?

Read the following posts: Why Forex Trade Is So Popular and What Is Price Action?

 

Looking to open a forex trading account?

Sign up with Easymarkets

D0wnload Free eBook on Understanding Forex Analysis

 

 

 

 

 

 

Advertisements

120 thoughts on “Pin Bar Strategy – How To Trade It

  1. Hey There. I found your blog the use of msn. This is a really well written article.
    I will make sure tto bbookmark it and com back to read more of your usefful information. Thank you for the post.

    I will certainly return.

    Like

  2. Wow, thijs pst iss pleasant, myy youngerr siister is amalyzing these kinds off things, thnus
    I amm goin too let now her. I couldn’t rwsist commenting.
    Veery well written! I couldn’t resijst commenting. Perfectly written! http://foxnews.co.uk

    Like

  3. It’s vefy simple too fiind oout anyy matrer onn nnet as comoared too books, as
    I foud thijs post aat this website. I hhave bbeen browsung on-line ggreater thasn threwe hours lately, yyet I never
    discovered anny fascinating article like yours. It iis beautifl worth suufficient forr me.
    In my opinion, iif alll websiite owners andd bloggers mmade ust
    right content material as yoou probgably did, thhe internet sall bbe mucxh more
    usseful thwn evsr before. I’ll immediatey graspp youhr rrss fed ass I can’t finmd yiur email subvscription link or
    newslettter service. Do yoou have any? Kindlky llet mee understand inn ordewr thbat I mmay
    subscribe. Thanks. http://www.cspan.net

    Like

  4. Pingback: Forex Market Goes Sideways | Forex Filli

  5. Great article!This iss the type of information that
    are supposed to be shared across the web. Shame on the search engines for not positioning this put
    up higher! Come on over andd talk over with my website .
    Tank you =)

    Like

  6. Las impresoras multifunción también se aúnan a la nube
    informática y, además de esto, proponen a los usuarios
    sus aplicaciones móviles para utilizarlas con el móvil y la tableta.

    Like

  7. hello there and thank you for your information ?
    I’ve certainly picked up something new from right here.

    I did however expertise some technical issues using this
    web site, since I experienced to reload tthe website a lot of times previous to I could get it to
    load correctly. I had been wondering if your web hosting is OK?
    Not tyat I am complaining, butt slow loading intances times will
    very frequently affect your placement in google and can damage your high quality score
    if advertising and marketing with Adwords. Anyway I am adding this RSS
    too my e-mail and can look out for much more of your respective interesting content.
    Ensure that you upodate this again soon.

    Like

  8. You got a very fantastic website, Glad I noticed itt through yahoo.

    Like

  9. Greetings! I know this is kinda off topic nevertheless I’d figured I’d ask.
    Wouild you bee interested in trading links or maybe guest writing a blog post or vice-versa?
    My site addresses a lot of the same topics as yours and I feel we could greatly benefit from each other.
    If you are interested feel free to send mme ann email.
    I look forward to hearing from you! Terrific blog by the way!

    Like

  10. Nice post. I learn something totally new and challenging oon websites I stumbleupon every
    day. It will alkways be helpful to read through content from other authors and practice a little something from ttheir webb sites.

    Like

  11. Pingback: You Need To Sharpen Your Trading Edge – Forex Filli

  12. Please keep on posting such high quality stories as this is an uncommon thing to find these days.
    I’m always searching online for content that may help me.
    Looking forward to another fantastic web site. Good luck!

    Like

  13. Helpful post, I’m going to spend more time learning about this subject.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s