Trading pinbar can be wrongly seen as an easy strategy and is presented by many Forex schools on the internet. Look, if every pinbar would be turning the trend to the other side or would cause large bounce, wouldn’t that be too easy ? Wouldn’t be everyone on the earth with internet connection rich ?
Pin bar as a turning point
Actually, this example perfectly shows how to not trade a pinbar and that way you can learn how to trade it. Sounds really weird right ? But trust me, you will understand it later in the article.
In this picture you can see pinbars that actually occurred right before a large movement but also pinbars that occurred just without any difference.
What is pinbar ?
Pinbar is a candle, that has small body against a wick either from the bottom or from the top. But why does it occur ? There are many different reasons for the pinbar to form but generally because the price hits a zone with large orders against the trend. So imagine that the price starts at some point in the beginning of the candle, rise, hit counter orders and come back to the beginning or very close to it. This formed a pinbar for us.
So how to trade pinbar ?
Pinbar is not strategy itself, at lease should not be. Taking pinbar with you to your existing strategy, patterns or just a zone where you are expecting the price to turn other way, is a perfect strategy. Pinbar can be used as a confirmation method and with a good strategy, pinbar can be super powerful.
This is so called breakout strategy and you can clearly see a pinbar that occurred after the breakout. Very easy and predictable, after pinbar confirmed the retest of the last breakout zone.
In the way of trend
Not always you need to be looking for turning points and sometimes it is easier to trade with a trend.
This pinbar showed us that the price wants to go to the downside and not turn yet.
Pinbars support trendlines perfectly. The combination of a trendline, pinbar and psychology behind trading, you have another strong strategy in your hands.