One famous and popular strategy in price action is the Pinbar strategy forex.
Trading strategies that are simple and can also be easily understood but provide high profitability.
Many traders have adopted pin bar strategies in trading both in forex or crypto trading.
Pinbar strategy forex is suitable for all kinds of financial markets.
There is no harm in us going to learn more about the pin bar trading strategy so that it will be applied in everyday trading.
Both in the crypto market or in the forex market.
In general, the pinbar strategy forex is to find a reversal candle pattern, this is a pretty good signal of a trend reversal.
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Pinbar candle explained
In pinbar strategy forex, Pin bar candle is a candle that has a structure, a long tail.
With a small body, the size of the long wick of the candle is at least 2/3 of the total length of the candle.
This pin bar stands for Pinocchio bar, which became popular since it was introduced by Martin Pring in his book “Technical Analysis Explained”.
In the cartoon film, Pinocchio has a longer nose every time he tells lies, his nose will longer more in every lie he says.
Then the pin bar candle concept adopts from the tail length formed by the market mechanism.
Maybe you have found a lot of pin bar formations in the graph in pinbar strategy forex, and you have also found a number of patterns like the one in the picture below.
The picture above is four kinds of structure for example pin bar candles, which have a unique shape, with long wick and a small candle body.
How to read it on the first long-tail candle is called a long tail or long wick, this is an indication of rejection after a bullish trend.
The body of a small candle is a bear candle, which means the rejection is strong enough so that the closing price is lower than the opening price.
The bottom is the small wick or short tail, this is an indication of a small bullish pressure trying to push the price move up.
How to read from the four-pin bar candles are basically the same, long wick shows rejection after bull or bears.
While the body of the candle determines whether the rejection is strong or weak.
When the rejection occurs in bullish, and then the body of the candle is a bull’s candle.
It means that the rejection is strong but then there is a strong enough pressure that makes the price rise again.
But if the rejection is weak then the body of the candle will form a bears candle, and the rule applies to the bullish and bearish pin bar.
Useful tips for trading with pin bars
Trading with pin bars does not always provide exact signal accuracy, sometimes what happens is just a false signal from the pin bar tail, and to minimize this fake, the following tips can you try to apply in everyday trading in pinbar strategy forex
- Focus more on finding pin bar candles when trending markets, because pin bar patterns will provide higher profitability during trending markets than pin bar during the market sideways.
- Try focus on finding pin bars in the support and resistance zones, while sideways there may be a lot of fake pin bar patterns, but by looking for patterns in the support and resistance zones, will reduce the signal lie.
- Focus more on finding a pin bar with long wick because a long tail indicates that the rejection pressure is very strong and this will provide higher profitability.
Pinbar candle patterns can appear on all timeframes on your MetaTrader, but you should choose a timeframe that has a low noise that will come fake signals.
For example by finding a pin bar on the H4 timeframe, and you can use the daily timeframe as a reference in determining trend patterns.
How to trade pin bar?
How to trade with pin bar, actually this is not too difficult, but this is also not easy and requires a lot of patience.
Why? because a pin bar signal will not always appear, on every trading day.
How to trade using the first pin bar is that we should learn to the trading setup pin bar patterns, which are generally grouped into bullish pin bar and bearish pin bar.
But it does not rule out the emergence of pin bars during sideways conditions.
However signals in sideways conditions can be ignored, this is only to reduce the possibility of lie signals.
Bullish pin bar
Pinbar bullish occurs in a downtrend, where when the strength of the trend falls rapidly dominates but surprisingly gets buyer’s pressure which causes a long wick candle from below the price action.
A bullish pin bar gives an indication of a reversal signal that allows traders to take long positions.
The example image above is just one form that appears, maybe in the graph, you will find many kinds of pin bar patterns with different candle variations.
Some traders prefer to wait for the next candle shape before opening a long or buy position, he considers that as a confirmation signal.
However, aggressive traders will quickly open long or buy positions when the bullish pin bar pattern is perfect, this might have more potential to get maximum profit but risk getting fake signals..
Bearish pin bar
In contrast to the bullish pin bar, the bearish pin bar comes when a strong uptrend is occurring.
When a strong uptrend is dominating the market, but surprisingly comes a large seller pressure so that it forms a long wick from above the price action, so that the candle forms a long wick from above and presses the body of the candle.
This is a strong rejection, which allows traders to take short positions when a bearish pin bar has appeared.
The way to trade a bearish pin bar is the same.
Some traders may still be waiting for the next candle shape before opening a short position to avoid fake pin bar.
But aggressive traders will quickly open a short position when a bearish pin bar is formed with a tail of at least 2/3 of the entire candle.
Pinbar take profit
Trading price action is the simplest strategy, how to determine the target profit on the pin bar trading strategy can be done in several ways.
- By looking at support and resistance. if the pin bar appears in the support zone, you can set a target in the resistance zone, but this might be too risky if volatility is high.
- The second way is to use a candlestick pattern if two or three candles have appeared weakening the rejection, you can close the position as soon as possible, this will further secure profit.
- The third way you can measure with a stop loss distance with a ratio of 1: 1, target profit and stop-loss with the same distance.
In trading, it is strongly recommended not to leave orders without using a stop loss.
Including when using the pin bar trading strategy, you can place a stop loss above or below the candle’s tail.
This is only in anticipation when the trend or signal that comes turns out to be just a lie, such as a Pinocchio nose.
But you can place a stop loss by giving more space below or above the pin bar’s tail, even though the risk is widening but it will give better space in the next move.
Pinbar Trading example
Using the pin bar trading strategy that must be a concern is to choose the best timeframe, whereby using daily timeframes or H4, this will usually give a more accurate pin bar signal.
In addition, avoiding flat conditions is also important because if the flat conditions appear pin bar, usually it is only a temporary movement, perhaps due to a momentary spike in volume.
In the picture below is the CADJPY pair on the daily timeframe, there have appeared several bullish pin bar patterns which are long or buy signals.
If we pay attention after the appearance of the pin bar the price then moves uptrend, but it is not always in a high swing.
So here what is very important and deciding is how to determine the right exit point.
The accuracy of the exit point will determine the total profit gained, and we should take the average of the movement by measuring the pin bar tail as a reference in determining the profit target.
But if you want to place profit targets at different levels you can open two positions with smaller position sizes.
For example, the smallest position size is 0.01, you can open two positions with the size of that position and place different targets.
Along with floating profit, you can modify stop loss to secure profit.
We take another example of pin bar trading by selecting the EURUSD pair below.
In the chart above we find three valid pin bar patterns and one fake pin bar.
What needs to be a concern of the fake pin bar is that this pattern appears on the counter-trend, so this signal should be ignored.
Two valid pin bar above the pattern appears above or below the price action.
It’s mean that the trend already the end and becomes a zone of support or resistance where the appearance of the pin bar makes it stronger becomes a rejection.
And one pin bar signal is still considered valid because it is still in accordance with the trend, where the movement is still far from the support zone.
Important point pin bar trading strategy
- Although it allows pin bar trading in sideways market conditions, it is not recommended to use this pattern in sideways markets, because more fake signals are coming, and again sideways conditions will be boring to wait.
- Pinbar candle patterns may appear in the middle of a trend, if it is in the direction of the trend then it is still considered valid, but if it is a counter-trend then it is better to be ignored.
- The pin bar candle pattern will be more accurate if it appears above or below the price action, where the trend tends to end, a long wick that appears above or below the zone of resistance support is higher in accuracy than in the middle of the trend.
- Placing stop loss below or above the tail when opening a trading position, this is important as an anticipatory step.
- Determine the target which is the ideal target, ideally the greater the target the more difficult to achieve.
- An important trading rule is a discipline, if the pattern is not formed you have to be patient and not change strategy, because there is no perfect strategy, with discipline the win ratio will be higher than the loss ratio.
The pin bar is short for Pinocchio bar, this pattern is a pattern of resistance when the trend is in progress.
Pinbar strategy forex, as trading strategies based on price action, are very simple.
And you will easily find pin bar patterns, so long as the candle’s tail is not less than 2/3 of the overall candle.
However, although this pattern is often formed, it is not always certain that there will be a reversal of the trend.
Sometimes the pattern formed becomes a sign of a continuation trend.
So it can be said that the pin bar trading strategy is finding patterns with high profitability.
But does not guarantee this signal will win.
If you like the clean MetaTrader graphic display without indicators, you can apply this strategy in your daily trading.
But if you’re not ready with real trading, take advantage of a TenkoFX demo account, until you find a profitable style.
Thus the description of the pin bar trading strategy, if you like this article please share via your social media.