Shh…It is a secret, but I must tell you this. All successful forex traders trade using three pin bar strategies that I am going to show you in this article. If you are already into the forex market, then you must be aware of the importance of a pin bar, but if you are a beginner, then you must be getting a mixture of success and failures. Although pin bar is a significant indication of price action, this is also highly complicated. So it is important to master the pin bar strategies especially the three strategies.
First things first – Never jump into the markets only on the basis of a pin bar like you see a pin bar and opened a position following just another strategy. No, this is not the right way. The correct way is to learn to differentiate between a high probability trade and a low probability trade. You should wait till the price action confirms a high probability low-risk trade instead of getting excited and jumping straight into the market.
So, now let us concentrate on the three strategies that can help in making every trade a success:
First Concentration Should be Pin Bars in a Trend
As a beginner, you should first concentrate on searching the pin bars in a trending market as it is less complicated to trade in a trending market. Consider reading a daily chart before going for a long time frame chart. A four-hour chart is also a good option but jumping straight to it is logical only when you have mastered the daily chart. This is because you need to compare the day-to-day and four-hour chart to check the matching pins as otherwise, the trade will go wrong.
Time to focus on pin bars at key chart level
Of course, as a beginner, you should concentrate on the pin bars in the trending market, but markets are not always on trend, and at some point, you will feel the need for more. Also, you will find very few pin bars if you concentrate just on the trending market which is a patience tester.
When you get at such point, it is the time to start practising using the key chart levels such a support and resistance (You can learn support and resistance here). These are the influential factors to get success in the currency trading. In this part of the trading, it is important to look for the pin bars at a key chart levels and not in the trending market. The following example gives you an overview of how it is done:
Here is one more example showing key chart levels in a highly volatile market:
The final stage is to look for long wicked pin bars
This is the time to look for the pin bars with long wicks protruding at the key support and resistance levels (the key chart levels). Usually, a pin bar is an indication of the reversal of a trend, and it is said that and also after a lot of experiments, I have noticed that the longer is the wick of the pin bar, higher is the probability of a reversal. These type of pin bars are the best indication to enter the market as it forms a high probability low-risk trade.
Traders have a different opinion on how long the wick of a pin bar should be, but there are many instances when you find a pin bar protruding to such an extent that it becomes inarguable to enter into the market based on that.
Just spotting a pin bar on the chart does not mean that it is a clear indication to jump into the market. Although you may find pin bars which are a good indication, there are many which look like a promising bet, but aren’t. It is important to practice on a demo account and see which pin bars work and which does not.