How to trade pin bar? Trading secrets
Pattern consists of one price bar and represents rejection of the price. Let’s imagine you are at the market – people came to by apples. All sellers know it and are trying to sell as high as possible and each sale makes them to offer higher prices. But buyers are not ready to buy at such high prices and sellers lower their prices to sell at ‘highest possible’ till there are some buyers left. Other words, price rejected and our pin bar formed.
Some time ago I made a post about price action setups. And since that time I got a lot of emails from my blog readers. Today I want to focus your attention on pin bar and give some tips how to trade it the most effective.
First of all always use additional filters. Not all pin bars are worth trading. Always use bigger time frames. Those of you, who follow me for a long time, know why I prefer trading daily charts.
Pay your attention to pin bars, that indicate trend continuation. If you see this setup in a flat market, it’s not worth trading for sure. Pin bars indicating end of pullback give us good signals. As additional filter you can use fibo, support and resistance or Elliot waves.
If your calculations show end of pullback and you see pin bar ( specially if this pin bar made a false break), look for entry point next day. Usually we enter on 50% retracement of pin bar.
This setup can be used as sign of trend continuation, as reversal signal. But as most of you are beginners, you have to remember that best of all it works as indicator of trend continuation or other words pin bar indicates that pullback is over. You can also use it as reversal signal at key resistance levels, but if trend is very strong, pin bar can give false signals – in 2017 a lot of such signals you could see in Dow 30.
Pin bar can be good addition to your trading startegy, but not it’s basis. Never take decisions only based on patterns.