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Pin Bar Entry: A pin bar is a 1 bar formation. The pin bar is a price bar which has rejected higher or lower prices. Price will open and move in one direction, and then “reverse” during the session to close at or past the open.  The candle is easy to spot because it has a “tail” or deep wick. Not all candles with tails are pin bars. Only a bar with a a tail ,
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often much larger than its body can be called a pin bar. Usually, the market closes past the open, or at the open.  It is a common reversal signal which typically needs to occur near a support or resistance area (horizontal level or dynamic moving average). Some traders use them in conjunction with Fibonacci retracements as well as trends or simple pivot/swing levels.  In a nutshell, Pin bars are the ultimate strategy for picking up major swings in prices. In my experience, the Forex market is most responsive to this entry signal, due to the number of traders in Forex, the pattern becomes self fulfilling.  Often, the best pin bars occur after a few days of movement in the opposite direction to the recent momentum.  I noted early on in my career that Pin bars that form in the direction of the trend, but are not after retracement, can be dangerous. What I am saying is, avoid pin bars that just are not obvious, and avoid ones that form right near the recent highs or lows of the current move.

Pin bar entry discussion:

There is 3 ways to enter directly from pin bar:  It is not always necessary, but it is always better to see that the nose of the candle has penetrated or hit some form of resistance (MA, Pivot Points or Fibonacci. )  Many times the close of the nose will not drop to the level of the open until minutes or seconds before the close of the bar.  Method #1: Aggressive  Sometimes, right after the nose bar closes, the next bar will open and immediately take off in your favor, but sometimes without you! This aggressive method makes sure that doesn’t happen, but not without a little bit more risk. To ensure that the trade doesn’t leave without you, place , you may use an at market entry. This way you are filled and happily making pips when then bar decides to drop like a rock without retracing at all. Place your stop just above the top of the tail. For an even more aggressive trade, place your stop above or below 60% of the range of the bar. I find that large 1 hour and even minor 240 minute Intraday pin bar signals tend to be fast and occur straight off the bat. I will never be able to teach you exactly where to get in, but if the trend is strong, market entries can be a good choice on intraday time frames.  Method #2: Aggressive  Sometimes, right after the nose bar closes, the next bar will open and immediately take off in your favor, but sometimes without you! This aggressive method uses market momentum as confirmation, but not without a little bit more risk. To ensure that the trade doesn’t leave without you, in particular on intraday time frames, use an “on stop “ entry. So if going short, I sell on stop below the low of the signal “pin bar”, and visa versa for longs. Again, probably more suited to intraday day signals, and possible good for daily pins which don’t have a massive range.  Method #3: Conservative  Many times , on the daily chart, particularly if the pin bar is large in range, I see a market retrace a little before reversing and plummeting or rallying, it might be 12 hours, or even 1 to 2 weeks, but often, there is a retracement before the signal comes off in the desired direction.. I discuss the retracement entry for pin bars in many of my videos for daily pin bars or larger 240 minute pin bars. The more conservative way to enter the pin bar setup, basically waits for the market to retraces to some extent. I will take the range of the signal pin bar, and find the 38% to 55% retrace range, and look for an entry in that vicinity. Some other ways to enter on a retracement would be to look for a logical nearby level , maybe the nearby resistance or support etc. Using a retracement to enter will facilitate a smaller stop and lessen your total risk, but increase the reward to risk ratio.. The drawback of the conservative method, is that you will sometimes miss out on that trade.

Pin Bar – very Important notes:

Intraday pins at market or use on stop orders to get in Daily pin bars, enter on retracement if range is large.If pin range is smaller market entry Often use daily and intraday pin bar signals together.

Entry and Stops:

#The Intraday pin strategies discussed later will be at market entries, or we wait for a move below or above the nose, depending on the direction of your trade. As long as the pin bar is not very huge in range, when there’s a strong trend under way ,I don’t wait, I just jump in.. (more later) # Daily charts, entry will be depending on the size of the latest pin, if it’s a large ranged pin, you might wait for the next day to retrace as we just discussed. I truly am 50/50 on which is the best method, but for new traders, I suggest you consider learning to trade the 38%-55% retracement method, and try to trade with trends or from obvious support and resistance. In time, you will progress. There are no strict rules for pin bars and price action. The key is to know the price signals themselves, everybody trades them differently and you will decide which is best over time. # I find it impossible to make a system and tell somebody there is a set way to trade a pin bar. First off, get experience at finding the good ones, and then learn from your mistakes as well as your fortunes. # Stop loss is important here, most of the time, it needs to be below the low or high of the signal pin bar. If your trading intraday and you get a confirmation signal, you might be able to get your stop tighter. Some will have it above the high or low of the pin bar itself, some use the 60% level of the pin bar, and some will use the 75% level. As I keep saying. It depends on the candle size, and realistically, depends on your risk reward potential. If it’s a huge pin, and you need a 100 pip stop, that’s a large stop, so you could make the stop smaller using a variety of self taught methods. Remember, using a retracement before entering the pin will naturally tighten the stop loss. An inside bar formation anywhere after pin bar formations will also help with risk management, because you could use the inside bar highs and lows for stop loss placement .. That’s more advanced, but something that you will see every now and then on the higher time frames like 240 minute and daily. # As time goes on you will learn that pin bars set up momentum plays, and you can manage intraday trades based on the daily signal itself .. Learning that comes in time. # Obvious support and resistance, trend lines and the 8 or 21 day EMA are all good levels to trade pins when starting out.. # When you enter, look for a profit objective at least 2 times your risk, ideally more!. Pin bars can lead into major moves, so don’t be afraid to hold a trade if the signal is strong and price action agrees. I look to target a recent key levels to take my profit. I recently made 6 times risk on a EURUSD daily pin bar, so guys, this can be done! # If your trading against a trend, you dam better make sure that pin bar is obvious and large, and try to have it align with some logical level in the market. Confluence helps!, if in doubt, don’t! # Be patient and wait for the perfect pins. An example of a perfect pin bar trades follows.
3 thoughts on “Discussion About Pinbar Trading”
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