Forex Trading Method With Pin Bar
Pin bars can occur in any price movement, and if we are used to finding formations, we can easily apply them to trading.
This article discusses the introduction of pin bar methods in forex trading and how to use them effectively. Pin bars can occur in any price movement, and if we are used to finding formations, we can easily apply them to trading. Pin bar is the bar that is in the middle of the 3 bar formation that often formed on price movement in candlestick chart or bar chart.
Characteristics of the formation of a pin bar:
- Open price and close pin bar prices are within or very close to the first bar price range and the third bar.
- Open price and close pin price bar are close together, the smaller the distance the better.
- The pin bar tail (the long line) comes out protruding between the two bars that flank it, the longer it becomes more accurate.
Here are some examples of bullish reversal and bearish reversal pin bar formation. The following example is made in the bar chart because the price action in the bar formation is relatively more visible. The long tail illustrates market resistance to a certain level.
In the following example the pin bar-pin bar formed on the dominant trend can work very well, also note the reversal correction which also forms a pin bar and is named the counter-trend pin bar, which also works according to the pin bar’s characteristics.
Trading using a pin bar formation
To enter the market using the pin bar formation is quite easy provided the characteristics of a pin bar formation as mentioned above are fulfilled. So we just look at whether a pin bar formation is formed on 3 bars that occur sequentially. To be more accurate, it is recommended to enter the market with pin bar formation supported by other indicators, such as trend line, support and resistance levels, moving averages or levels of the Fibonacci retracement.
Timing enter the market and stop loss level.
For bearish pin bar formation: we enter sell after the price breaks the lowest level of the pin bar, and the stop loss is set slightly above the highest level of the pin bar tail.
For bullish pin bar formation: we open buy after the highest penetrated pin level, and our stop loss sets slightly below the lowest level of the pin bar’s tail.
Pin bar formation in candlestick chart
The pin bar formation in the candlestick chart is exactly the same as the bar chart, just different in naming or terminology. For bearish reversal formation the pin bar is usually called inverted hammer long wicked doji, long wicked gravestone, or shooting star. In bullish reversal formation the pin bar is called a hammer, long wicked doji, or long wicked dragonfly.
Examples of pin bar formations are formed in the candlestick chart:
Pin bar formation works well on almost all time frame trading, but is very powerful on daily time frames. weekly and at least 4 hour.