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The ultimate forex pin bar trading pattern
If you were told to choose only one pattern to trade the forex market, only one and nothing else, the pin bar pattern should be your choice. This is undoubtedly one of the most powerful and reliable patterns out there. If you commit to learn it and trade it, you could literally drop all the rest of your strategies.
If you prefer to watch the video on how to trade the pin bar strategy, scroll down to the bottom of the article
A pin bar is a candle with a long tail and a very short body.
What is a Pin Bar Pattern?
As we just said, a pin bar is a single candle with a significant tail, and a very short or almost no body. In order to fit the definition, the tail should cover at least more than 70% of the candle.
This means that the candle opened at a certain price, moved far from that price, but came back near the opening point for the closing.
These bars may form any time, but they form powerful patterns when they appear near support or resistance levels. As price rejects these levels, a pin bar will form and smart money will follow to start a new reversal trend.
The psychology behind pin bar candles
Let’s try to understand what forms a pin bar candle.
When the market is approaching a significant price level (supply or demand levels), it can do several things. The market could break through it, could consolidate near the level, could reject the level, or could reject it AGGRESSIVELY.
When the market rejects a level aggressively, more money will follow. This will tend to start a new directional movement in the direction of the pin bar candle.
This is the reason why pin bar patterns are so reliable, and they present an opportunity for you to join the smart and big money.
Pin bar formations
There are a few types of pin bar candles, both bullish and bearish. Here is an image with the most common. They are all valid pin bars.
How to recognize before everyone else if the pin bar will fail or succeed?
In order to be a valid tradeable pattern, the pin bar must form near support or resistance levels, AND against those levels. This is a key point in trading pin bars.
Many rookie traders will trade every pin bar candle they find, leading them to lose a lot of money.
Pro traders will trade only valid setups with well-defined rules, which we’ ll define right now.
How to trade forex pin bar strategies
How to trade forex pin bar strategiesThe best way to trade a pin bar candle pattern is placing an entry stop order at the top of a bullish pin bar candle, or at the bottom of a bearish pin bar candle. That way you get triggered only if there is confirmation of a new directional movement. Your stop loss should be placed above or below the tail.
Bullish Pin bar Strategy.
- Look for bullish pin bar candles near support levels. (we recommend the 1h, 4h, 1D, 1W time frames).
- Place a buy stop order at the top of a bullish pin bar candle.
- Place your stop loss on the opposite side of the candle.
- Place your initial target at 2x risk taken.
- Don’t risk more than 1.5% in one single trade.
Bearish Pin Bar Strategy
- Look for bearish pin bar candles near resistance levels. (we recommend the 1h, 4h, 1D, 1W time frames).
- Place a sell stop order at the bottom of the pin bar candle.
- Place your stop loss on the opposite side of the candle.
- Place your initial target at 2x risk taken.
- Don’t risk more than 1.5% in one single trade.
Advantages of trading pin bar candles patterns
There are a lot of advantages to trading this pattern.
First, it is a very accurate pattern, and easy to spot. You don’t get messed with fancy indicators and tools.
Second, you have very well defined entry and exit points, making it easy to measure risk.
Third, it works on any time frame and any forex pair.
Summary
You have just discovered the holy grail of forex patterns. The pin bar candle pattern represents where the price is about to go, and it offers you an opportunity to join the movement. Practice to trade with confidence this pattern, and you will discover a new profitable trading world.
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