Pin Bar is one of the most powerful, and at the same time easily recognizable, candlestick patterns in a graphical analysis.However, many novice forex traders make mistakes when trading this model: they do not take into account the quality of the formed pin-bar, do not pay attention to its location and the wrong part of the deal, asusing market orders.How to recognize pin bars as well as to avoid the above error, you will learn from this video tutorial.
What is the pin-bar?
Ping-bar - this is one of the main models of Price Action.Its name comes from the name of a famous character from a fairy tale of Pinocchio by Carlo Collodi.
Let's imagine that we have a schedule.Trend is up and price increases.Then there is a candle with a small body.And while it has a small shadow on the one hand and on the other a tremendous shadow:
This is not nothing but a pin-bar.
Pin Bar - this reversal pattern, suggesting a reversal in price.This candle, which has a small body with a long tail on the
And setup the body needs is inside the previous candle range, ie, from point to point High Low of the previous candle.
If his body was not in the range of the previous bar (as in the example shown below), we would not have called it a pin-bar, because it does not meet the characteristics of the figures:
How can we explain the emergence of the figureon the graph?
We watched the price upwards.Then, on the candle, which later became a pin-bar, there was a strong reversal.People for a long time to buy, and then due to various factors, the price has gone in the opposite direction.
What happens with the positions of the players who place orders for the purchase?They will lose their money, as they will work stop loss.And that is what was the purpose of this reversal.Collection of stop-loss of those who stood in the purchases.
As this movement was sharp, then activated a lot more orders for sale which certainly exhibited other traders waiting for this situation.
And all this led to the fact that the candle on the chart drew a long tail and a small body.
now buyers who are stopped, will go on sale, and those who have worked pending orders will not be in a hurry to leave them, because they are already a little profit.
Thus, we can observe a shift in market sentiment as well as the shape, which is called pin bar .
This reversal pattern, so in the future, we expect the downward movement.Namely bearish candle:
In order to take this pattern, we need to have a pin-bar was the fulcrum.This should be an additional factor that gives us the right to assume that there will be further downward movement.We need a reference level, the level of support or resistance, which pushes the pin bar:
If the pivot point is not, then this pattern for taking opening deals we would not.
How to enter the market on Ping-bar?
Login pending orders below short shadows
Standard input on the pin bar is carried out pending orders below the short shadow of a candle:
If the pin bar emerges in the opposite direction after the downward movement, then put a deferredorder buy stop above the short shadow of a candle:
This classic method is based on the fact that if the price will not want to turn around and continue its active movement of the previous trend, our pending order is not activated, and we will remove it.
second method: "Wait for rollback to 50% of candles»
In order to use the second method, we need to set the pending about its middle:
This is called a limit order.In this case, the sell limit.
Plus this input that we get more profit, because we can get a better price for us.
downside is that the market there is nothing anyone should not, therefore, fall back to the middle of the setup price is not obliged.And if the order is not activated, then we do not earn anything.
third method: "Login pending order next level»
Just to clarify that, in its trade I use this method.
expose pending order just below:
Please note that the rate may not necessarily be on the edge of the candle.It can be like anywhere:
deferred order is placed directly under the level.
Which of these methods is best?
No clear answer, which input method is better.It all depends on the situation.I'd add that if I am not sure of the pin-bar, then I put a pending order just below the shade.If there is a significant level, I try to place a pending order with him.
Rollback 50% I do not use his trade, because guided by the level.
Sometimes a pending order level near the same level as 50% of the candles.But this is an optional factor.
to greatly confuse yourself not, I recommend using the classic method of entry.A pending order is put just below the short shadow of the pin bar.For beginners, at first it will be enough.
in any transaction should not forget about Stop loss limit potential losses.
Suppose we put a pending order slightly below the short shadow of a candle:
it is activated, and we made a deal, but we need a stop loss.What for?Because the price may at any time to turn around without any reason.
Even the most beautiful setups sometimes will bring a stop-loss.
classical method of installing the stop loss at the pin bar has it that the stop loss should be put just above the long-tail candlestick.
That is like so:
I think it's better to put the stop loss for the level.
Why is it better that way?Because the stop-loss level for the exhibition, more than logically justified.He has great power and this decreases the number of points, you are risking.
In certain cases, you can enter into a transaction for the pin bar with a very small foot -lossom.However, provided that the entry into the market will be around the level, and the stop loss will be placed just above the entrance, with the level.
Such transactions are more profitable, enjoyable, and generally bring only benefit your trading account.
So in every transaction, I try to put a stop loss as small as possible.
addition to entering a trade, we need more and be able to get out of it.
The easiest way out - an exit to the next level of resistance support.This is the level that is in the direction of price movement.To hours to sit in front of the monitor, waiting for the moment when the price reaches the intended purpose, it is enough to put in the right place Take Profit:
If you can not find the level of the graph, it is possible to multiply the stop loss at 2 or 3 andthus get the size of the take profit.
Assume that you have a stop loss is 20 pips.Multiply by 3 and get 60 points:
Also, I would advise you to bring a deal to breakeven after two stop-loss.If you have a stop loss of 20 points, and the price went to 40 points, it is required to move the stop-loss at the opening price of the transaction.Thus, you insure yourself against a possible price reversal.
And another possible way of issuing take profit - a measurement of the length of the pin bar.The size of the take profit is equal to the size of a pin-bar candle.
What you should pay attention to trade pin bars?
First of all, it is best to go with the trend.
In fact, the best possible option would be to enter the market only with the trend:
Because trade with the trend at times increases the profitability of transactions.I think with that you have to agree.
Since trade with the trend, we have repeatedly discussed, I think you should not arise any problems with this issue.
If you really want to take a pin-bar against the trend, it should be a very "nice".It should be a small body in the range of the previous candlestick and a long eye-catching tail.It should be clearly and without doubt see that this pin bar.
general about trade against the trend we have a separate article , where we discussed the various nuances.I recommend to familiarize .
Overall, I would not recommend taking a pin-bars against the trend, because it is unnecessary risk.Try to always follow the trend.
As I said earlier, we are always looking for support on the level.
And if the tail pin-bar forms a false breakdown, then for us it is a good sign:
Why is it a good sign?
After the breakdown of the price collected stop-loss orders and pending orders, which were at that level.This setup gives the effect.Therefore, if there is a false breakout level, which forms the tail of the pin bar - this is an additional exacerbating factor.
It is believed that the bullish pin bar body should be bullish and bearish in the body have to be bearish.
I have not seen the statistics that confirm this statement.In practice, not much difference.No matter what kind of body at the pin bar.
If the pin bar bullish, as in the screenshot above, and his body is bullish, then it's okay to be afraid not worth it.
Do not forget that the market there are random fluctuations and if the small body, the price can fall back to 10-15 points and the body would be bullish.
This is not a factor on which you need to think.
There is another point that the internet is being a lot of debate and discussion.
Should pin bar stand on the graph?
In my opinion, it is not required and it is possible to go for a pin-bar, if it is not strongly stands.
For example, there is a pin-bar, which does not stand out in this area, but as we see in the future, he fulfills:
The only thing I want to note - patterns that are well highlighted in the chart, work out, as a rule, better.
Therefore, if you want to take only the strongest signals, you should pay your attention to the bright setups, marked on the graph with the naked eye.But this is not some kind of 100% criterion.Does not matter, to predict which of them will be profitable, it is impossible as long as the schedule starts to move forward.
Before pin bar must necessarily be some movement.Flat should not be.If the signal is preceded by flat, then take it dangerous.
very well the nuance shows a graph of the USDJPY, which is located in a flat for a few months:
During all this time there was a lot of pin-bars in all directions.However, any effect they have not yielded.
Then there was a movement down there was a pin-bar, and then a sharp jump upward.
Hence we conclude that this setup should always precede any significant movement.
Keep this in mind and try not to risk for nothing.
Let's look at some examples of trade on pin bars.
For the first example we use the previous situation and consider how worked the pin bar, preceded flat:
Once again I remind you that before we went fletovoe movement.After that the sample can be in any direction, so one could take this pin-bar, although it was against the trend.
Why?Because there is a noticeable movement, then there is a breakdown of the level and resting on all levels.
pin bar body is under the level, so the entrance was carried out thanks to the placed pending order to buy just above the top of the pin-bar:
Since there is a level requires a confirmation that for him the price was fixed.
Stop loss I would recommend to put a little below the low of the previous candle:
If you put a stop-loss at the long tail, then he would have to be very large, and it is not in our interests.
take profit, I would put on the border of the previous flat.Because we do not know whether to continue the upward movement or the price will start moving again in a zigzag manner in the hallway.
thus take profit in this transaction would be 127 points, while the stop loss 68 points.
Just want to note that this was an example of a difficult situation, which in the chart does not occur every day.
Let's move on to the next example, but take it to the situation easier.
We see a long flat, where a clear trend is not observed.Recent movements indicate a bullish mood, after which there is a pin-bar, and then another one next to it.
How would we have done here?
Since the upper limit of the pin-bar near the level it is logical to place a pending order just above the high point of a pin-bar:
Please note that it is not much stands out on the chart, but it is not a critical input factor.
Stop-loss could put the tail on the classical method, and then move closer to the tail of the new pin-bar:
Thus, we have slightly reduced the risk in this transaction.
logical thing would be to withdraw from purchases at the round price level 101, which could well prove to be an obstacle:
Consider another example of a pin-bar on the trend:
We see that it is based on a low level.In this case, I would have walked around it:
Stop loss would set just below the low of our pin-bar:
It is close to the level, so all would have happened here on the classical method of installation of stop-loss.
Once formed the next candle, could move the stop loss just below its low.
It would lower its value and, consequently, our costs:
least I went out of the deal after the gap:
We know that the gaps tend to close.Therefore, I would not take unnecessary risks.
Even if we went to the Gap, the stop loss would have been 60 points, and take profit of 490 points.
Pretty good deal.
Another trend pin bar on the daily chart for all your favorite pair EURUSD.
In this figure there is support level is close to the pin bar.
But worth considering that the pin-bar based on the level of only its tail, so in this case exhibited his tail candles:
Stop Loss transaction would amount to about 54 points.
Since the pin bar is not too clearly highlighted in the chart, the input would just above the high:
take profit, I would put at the top point here in this place:
Whilethat the stop-loss was a big size, take profit allowed to exit the trade with a profit.
In conclusion, I would like to advise you, carefully draw your attention to the pin bars.This figure is one of the strongest in the Price Action arsenal.
Do not go against the market trend, and only after the flat trend or when there is a noticeable movement that precede the pin bar.
Expose stop-loss, take into account the levels and do not forget to come out with a profit.
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