Pin Bar Trading Strategy: Everything You Need to Be Profitable -

Pin Bar Trading Strategy: Everything You Need to Be Profitable

FX Signals – The pin bar is by far my favorite candlestick pattern in the Forex market.

In this lesson, we’re going to cover pin bar characteristics, how to know if a setup is worth trading, and entry and exit strategies.

As always, the term ‘bar’ is interchangeable with ‘candlestick’,

However, the common term has always been “bar” and not “candlestick”.

Let’s start with the tail, which is its defining characteristic and is also sometimes called the wick or shadow.

The tail of a pin bar should be at least 2/3 the length of the entire bar.

The longer, the better, but it must make up at least 2/3 of the bar from end to end.

Notice in the image above, the tail is about 3/4 of the entire bar, so this qualifies.

The body is also important as it represents the open and close of the pattern.

The open and close should be close together; the closer, the better.

The body should also be close to the end of the pin bar. Notice how close the open and close are to the nose.

Last but not least, the nose.

While not as important as the tail or body, the nose is important only as it relates to the tail and body.

This is because if the tail is at least 2/3 of the entire bar and the body is small, then the nose should also be relatively small.

Know too that the pattern doesn’t need a nose to be valid.

Sometimes it’s non-existent if the open or close occurs at the extreme end of the pin bar.

Here’s a short video explanation of the characteristics.

Pin Bar Trading Strategy: Everything You Need to Be Profitable

The Two Types of Pin Bars

There are two main types of pin bars as it relates to price action patterns that are taught in my price action course.

Most traders assume the pin bar is only a reversal pattern. And while it can signal a reversal, it can also be a continuation pattern.

First, let’s look at the more common way to trade pin bars as a reversal pattern.

Charting Basics – Bars vs. Candlesticks

Pin Bar Trading Strategy: Everything You Need to Be Profitable

The reversal pin bar (above) is best played in a ranging market or on a pullback within a larger trend. Let’s look at both in action.

Below is a great example of a reversal that formed after price broke through support and then retested it from the other side as resistance.

Pin Bar Trading Strategy: Everything You Need to Be Profitable

Frequently Asked Questions

What is a pin bar?

A pin bar is a type of candlestick pattern that suggests strong buying or selling pressure because of the long upper or lower wick, also called a shadow or tail.

What characteristics define a pin bar?

It must have a wick that is at least two-thirds of the candlestick’s range. So the body of the candlestick must be relatively small compared to the overall size of the pattern.

What makes these patterns effective?

The most effective pin bars occur at key support or resistance levels.

How to Read Forex Charts

Are all pin bars reversal patterns?

Not necessarily. While most pin bars signal a reversal, they can also occur within a trend. So they can be continuation patterns under the right circumstances.

Is pin bar a good trading strategy?

It is, but only when combined with other factors, including the quality of the pin bar itself and whether it formed at a key level, among others.

Forex-e-Learn Course

Are you currently trading pin bars? If not, will you in the future after reading this article?

Daily Forex Signals

These are the three most traded currencies beside the US dollar. Minor pairs have a smaller market share compared to major pairs. Because of this they can exhibit lower market liquidity. Lower market liquidity will mean that a broker will give wider dealing forex spreads.

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