There are many Price Action signals traders can use to create an edge in their favour over the market. An edge is something that over a large sample size of trades tilt the odds in the traders favour. A trader could flip a coin and have 50% win rate over enough trades (minus the spread), so finding an edge should average a minimum win rate of 51% or better. In this article we are going to concentrate on the Pin Bar Reversal.
The Pin Bar
Recap
The Pin Bar
The Pin bar is a very simple setup and very easy to spot for Price Action traders. A Pin Bar consists of a small body with a large wick or nose. The name Pin Bar is derived from the name Pinocchio Bar which means a candle that is telling a lie.
The nose on the Pin Bar is the large wick. It is telling a lie to the market. It is telling traders it is looking to break out one way when we know in fact the reverse is true as the Pin Bar is telling a lie and looking to go back the opposite way.
Below I have attached some examples of the Pin Bar. Take note of the long wicks and small body.
An example of a Bearish Pin Bar in a chart is below. Notice the Long wick and then the explosions of price going back the other way (lower).
The Pin Bar can be a very powerful and reliable setup when traders enter them from the correct areas. Traders will normally get caught out with the Pin Bar when entering from the incorrect positions.
The best places to enter trades on the Pin bar are from areas we would expect other traders to enter from. These are areas such as support or resistance, pull-backs within the trend or making a false break of a supply and demand zone.
An example of two Pin Bar’s with the trend is below. Trading with the trend improves a traders overall edge as they are taking a position with the same market bias as the big players.
The following example is of a Pin Bar that has formed from resistance. This is an example of what we call an A+ trade. The recent momentum was down and price pulled back to a solid resistance zone. This was a very solid trade.
Recap
The Pin Bar can be a very reliable and powerful setup when the Price Action trader has acquired the correct knowledge. The trader needs to know much more than just what a Pin Bar is. They also must learn:
- How to enter Pin Bar
- How to manage the Pin Bar i,e: take profit and place stops etc
- The Best places to take profit or move to break even
- When not to enter the Pin Bar
- The Pin Bar’s to not get sucked into trading
- The best markets traders can trade Pin Bar’s in
Forex School Online with head coach Johnathon Fox has a plethora of free Price Action videos and articles that can help traders learn the art of the Pin Bar and Price Action trading. Johnathon also runs a course for serious traders looking to take their trading to the next level. To watch or read any of the Price Action videos or articles please visit here: Forex School Online Free Education
