The pin bar candlestick is a reversal setup for trading. Pin bar candlestick pattern Robot pin bar support line
Pin Bar is the strongest (at the same time, the simplest) reversal. It would not be an exaggeration to say that most traders are (even) familiar with Pin Bars and can easily identify them on. But why, if this model is so simple and strong, trading with Pin Bars does not always bring nice results? I decided to devote a separate article to the answer to this question in my own. By the way, at the end of the article, everyone can download the Pin Bar indicator with an alert for free.
Pin Bar pattern
There are only three signs by which you can accurately determine that you have a Pin Bar reversal pattern in front of you:
- Have a small body
- Long shadow on one side (at least twice as long as the body),
- Short or missing shadow on the other side.
In fact, the PinBar candlestick is the beginning of the chart reversal (or), since a long shadow appears when the price rolls back within the considered timeframe. However, the testing results show that if a trader thoughtlessly place bets after each Pin Bar that comes his way, then the deposit of this trader will gradually decrease.
The thing is that not all Pin Bars of binary options are the same, namely, there are 2 types of this model, correct and false. Let's take an example to see how they differ from each other.
Correct and false PinBars
You can tell a correct PinBar from a false one by the previous price behavior on the chart. If the Pin Bar, or rather its shadow, goes far beyond the previous price values, then this is the correct, classic Pin Bar. If the shadow of the Pin Bar is within the range of the previous prices, then the Pin Bar is false.
In the screenshot above, you can see that the shadow of the false Pin Bar did not touch any extremely high or low values, but rather moved in the range of the prices passed earlier. That is, the reversal pattern turned out to be just a short-term pullback, after which the chart continued to grow. While the correct pin bar formed a new high on the chart, followed by a reversal.
Pin Bars trading strategy
With correct Pin Bars, everything is simple, a strong signal for binary options is the situation in which the pattern is formed:
- Near the lines
- After breaking through the boundaries,
- About .
In other words, you can buy options provided that the PinBar receives confirmation in the form of an important level (or channel border) from which the price should reverse.
False Pin Bars are considered less powerful, but they can also be used in trading. To do this, you need to slightly postpone the chart and determine which trend is currently dominating the market. If we see that there is a sequential series of highs and lows in front of us, each of which is higher than the previous one, then the trend is upward, if on the contrary, it means a downtrend. Only those false Pin Bars, which are formed on chart pullbacks from the main trend, should be taken into account.
Conclusion
Pin Bars are strong signals preceding a price reversal in the market. However, not all beginners use this model correctly in trading. It is important to understand that you should not blindly enter trades after each PinBar that appears on the chart. Despite its strength, Pin Baram, like anyone else, needs to look for confirmation from the indicators, and the direction of the main trend.
Free download for free the Pin Bars indicator:
Let me remind you that I have already published the complete instructions for installing indicators in the MT4 terminal. The instruction is still available.
Candlestick models for predicting price movements in financial markets refers to the method of analysis. Pin Bar is the middle bar of the model., consisting of three candles or bars, which corresponds to the graphical parameters on the price chart. This setup predicts a trend reversal, in some cases a continuation, the pattern shows the most accurate signal on time periods - H1-MN.
The best broker, in my opinion, is for day trading and scalping.
Who opened the Pin Bar and why the pattern got this name
Martin Pring is a financial markets analyst with many years of experience in technical analysis, in his book "On Price Patterns" he examines the formation of candles and bars, he was the author of the term Pinocchio Bar (Pin Bar). The decision to use the original term "Pinocchio Bar" was made because the main candlestick of the pattern is like the nose of a boy named Pinocchio - the longer the nose of the bar, the stronger the signal for a trend reversal - Pinocchio is more lying.
Technical structure and types of Pin Bars
Price Action Pin Bar setup is built from three candles or bars:
- left eye;
- right eye.
The left eye is the last candlestick or current trend in the market. The nose is the main signal candlestick or bar that indicates the end of the current trend and predicts a reversal. The right eye is the first candlestick of a new trend formation.
Four types of Pin Bars in the Forex market:
- bullish for a trend reversal;
- bearish for a trend reversal;
- bullish for the continuation of the trend;
- bearish for the continuation of the trend.
How to find Pin Bars on a Forex chart?
It is not difficult to recognize and interpret the Pin Bar on quotes, it is enough to know the ideal parameters of the model:
- the body of the candle is not more than 20% of the size of the nose;
- the lower shadow is less than the body of the candle or its complete absence;
- the bodies of the "left and right eyes" should not go above the Pin Bar.
If it has a size of 10 points and a nose size of 25 points, then the model is not classified as ideal. Correct Pins have a long nose(the spire of the candlestick), extending far beyond the boundaries of the surrounding candles (right and left eyes), the body is as close to the end of the candlestick as possible and is located in the range of the surrounding candles or close to them.
Reasons for the appearance of Pin Bars on the market
Let's analyze the process of forming a setup using the example of a bearish pattern. Red candlestick on the hourly timeframe - the price was growing in the period of 1 hour, but it turned out that the bulls had control over the market at a certain period of time and at the moment, during the same period - 1 hour, the sellers got into the greatest rage and not only kept buyers, but took full control of the market. By the end of the hourly session, the sellers had completely erased the buyer's intentions and pushed the price below the opening price of the candlestick body. The candlestick closed in the red, which indicates the complete dominance of sellers in the market.
Considering the Pin Bar as a reversal or continuation signal is safer when it forms near support or resistance levels, important or their intersection, at the pivot points or lines. An auxiliary signal gives a high probability of fulfilling the forecast according to the Pin Bar model.
Pin Bar entry / exit rules
Entry with a pending order, method 1.
When a trend reversal signal appears, the market is entered after the Pin Bar body is closed. A pending order BuyStop or SellStop is placed below / above the hi / low level (extremes), i.e. maximum points of Pin Bar. set at a distance of 5-15 points (4 digits) from the end of the nose. Placement of TakeProfit depends on the trading style; it is better to fix and move StopLoss in the direction of the trend until the signal about the end of the trend appears.
An example of a market entry with a SellStop pending order on a bearish pattern.
Entry with a pending order, method 2.
As described above, formation occurs near important price levels, psychological levels, Fibonacci lines, etc. Entry into the market by a Pin Bars signal in such situations is also performed by a pending order, but StopLoss is placed 10-20 points (at 4 digits) above or below the price level.
Signal infographic of the Pin Bar pattern in Forex
Pin Bar models in the real market
Consider an example of a model in the market for GBP / CHF, USD / CHF and NZD / USD.
The screen shows formed Pin Bar for the GBP / CHF pair on the D1 timeframe with 100% signal processing and a move of 770+ points (4 digits each).
In the second example, the buy signal shows bullish pin bar for USD / CHF on the H4 timeframe, which brought traders 170+ points (4 digits) of profit.
The PinBar strategy is based on a setup using the Pinbar pattern in the context of the current market trend (trend). You consider the direction of the trend and the corresponding buy / sell setup, and then you get an entry point.
A separate advantage of this strategy is its versatility. By adjusting the position with the correct trailing stop, the deal can be withdrawn in the medium term, significantly increasing the deposit. The presence of only one simultaneously open deal on one currency instrument does not load your deposit. A correctly set Stop Loss sets a framework of comfort, within which you will always be calm. The Pinbar strategy algorithm will tell you what to do in a specific market period.
Click the button below"explore", to go through step by step guide and master the Pinbar strategy in 5 easy steps
- The pin bar pattern or similar candlestick combinations appear quite often and it is necessary to select only the most reliable ones for trading, i.e. those that are near significant price levels: Fibonacci, highs / lows, crossing of moving averages and breakdown of the boundaries of channel indicators.
- The price rarely (in no more than 10% of cases) continues to move towards the nose, knocking out Stop Loss without a chance to close the position at breakeven. However, you do not need to save on the stop, if the market is dynamic, increase the distance to 10-20 points.
As the movement develops, we begin partial profit-taking, if a trailing stop is not used. It is impossible to know exactly how long the trend will last, especially if there are significant upcoming fundamental events. Also, the price reversal may not start immediately - after closing the right eye, several candles may pass before the directional price movement begins. Therefore, we divide the starting lot into 3-4 parts and close them as soon as possible.
This tactic allows you to remove unnecessary psychological stress, since we remain in profit even with an unpredictable reverse trend. If the price, on the contrary, continues to go in the right direction, you can try to add volume to the current position for greater profit, but this is only if you have experience. Newbies should take profits at the first sign of a shift in the balance of power between buyers and sellers!
We use indicators
To quickly find a pin bar, special tools have been developed, one of the simplest and most effective is Pinbar. For analysis, only price levels, and this allows you to identify the most "ideal" candlestick combinations.
Once installed on the chart, signals are displayed as arrows indicating possible future movement. It should be said that the indicator does not redraw, which is a definite plus. However, you shouldn't open a trade on every new arrow. If you look closely at the history, you will notice that in the first place there are candles similar to the "nose", and the "eyes" are given secondary attention. Use the Pinbar only as a starting point to gain attention, then look at the general market situation. Other instruments may cancel the indicator signal!
Press the button for a step-by-step guide to the Pinbar strategy and master the strategy in 5 easy steps Explore "
Pinbar indicator signals.
Pay attention to the bearish pin bar found by the indicator. The pattern turned out to be correct with the price falling on the next 4 candles after it began to roll back in the opposite direction. This once again proves the importance of partial profit taking manually, or with the transition to breakeven using a trailing stop.
The settings are typical for the indicators of this group and similar principles for improving the strategy can be used in manual trading. The main parameters are as follows:
- The ratio of the body of the "nose" candle to its length. Each currency pair has its own average length due to volatility and overall market liquidity. If you wait for a "long nose" where it, in principle, cannot be, they will be missed good points entrance.
- The minimum length of the nose in relation to the body of the candle. Relevant for a sideways market and a period of decreased volatility. In this case, the average length of the candles decreases and you may not notice the entry point even in a wide range. However, if you watch for small noses, it is quite possible to identify a promising pin bar in a calm market.
- The position of the nose relative to the left eye. The classic nose should be completely inside the body of the left candlestick, but this is an optional condition. The market rarely gives ideal models and this can be seen in the figure above, but, nevertheless, the development is going in the right direction and in each case you need to be guided by experience and confirmation from other indicators.
- The length of the left candlestick. At first glance, this is not worth paying special attention to, but it is not. When the market moves with large multidirectional impulses, almost all candles have long shadows and behind this “forest” it is visually difficult to see the pin bar and even the large left eye seems small. Reducing the average length solves the problem.
Candlestick pattern The pin bar is a profitable and reliable Price Action signal for any trading asset. It also has a significant drawback - it works correctly only on older (from one hour or more) timeframes, which, incidentally, is typical for all candlestick combinations and technical indicators. In addition, ideal combinations are rare and require constant attention and filtering of false signals.
In fact, this is a kind of graphical pattern, if you like: a pin bar, which consists of 3 candlesticks or bars. In other words, this is a strong enough, and most importantly, a reliable continuation signal. market movement, or its reversal.
This signal is typical for time periods from an hour and above. For the first time in his book, which is called "On Price Patterns" and the formation of candles and bars, the writer Martin Pring discussed. Then he came up with a certain term "Pinnochio Bar". This bar provides a reliable reversal signal.
What is a Pin Bar in Forex and what strategy is it used with?
Before discussing this term in more detail and deciding which strategy is invariably suitable for trading on a given bar, let's find out how it looks. The picture below shows an illustrative pattern of the Pin Bar candlestick.
A well-known trader used this term for the reason that a candle is like the nose of a character from Pinocchio's book, the longer it gets, the stronger the trend signal about a reversal. That is, Pinocchio is more lying.
What causes the Pin bar on Forex charts?
For example, imagine that the picture shows a red candlestick on the H1 timeframe. When the price rises for one hour, it turns out that the bulls could temporarily control the market, but then within the same hour the sellers went into a rage.
Consequently, they were not only able to contain prices, but also to take full control of the market. At the end of the hourly session, traders have completely discouraged others from buying. Moreover, they pushed the price below the body period of our candlestick. Our candlestick closes in the red zone, which confirms the subordination of the market to the actions of sellers.
How to search for pin bars when trading Forex?
In fact, the Pin Bar is easily recognized on the chart. To find it, it is enough to be familiar with the ideal parameters of the model. And this is when the body of the candle is twenty percent of the nose, and the wick is slightly larger than the body.
Also, the complete absence of a wick is allowed. If the body of our candle is ten points in size and the nose is twenty-five points in size, we can assume that this Pin Bar is ideal. As already mentioned, such a Pin Bar has a long nose that extends far beyond the boundaries of the candle. At the same time, the body should be located as close to the end of the candlestick as possible, and also be in the range of the surrounding candles. Location close to them is allowed.
There are also terms such as:
- bullish (rising)
- and bearish (falling) pin bars.
We have already mentioned bulls in the market. These terms have long been controversial among traders in relation to the direction of the pattern formation itself, and then the direction of the trend, already with the formed pattern.
Some experts claim that a pin bar with a nose up is an ordinary bullish bar, while others claim that this is the main component of the middle candlestick shadow.
It doesn't really matter what you call this pattern, but against the background of conflicting terms, it is better to call it a bullish pin and a bearish signal. And vice versa. The picture below shows a bullish (rising) pin bar, a sell signal. Bearish is a buy signal.
It is safest to consider the graphic pin bar as a reversal signal. After all, when a pin is formed in the vicinity of support / resistance levels, an extremely important price level near the pivot points line, it is profitable. Any additional signal gives a significant probability of making a prediction according to our pin bar model. But still, there are situations when this pattern is formed as a signal simple continuation trend.
Trading strategy - "Pin bar" based on a chart pattern: a detailed description
The Pin Bar trading tactic is considered a popular strategy for opening and closing positions. It is based on a specific chart pattern and then on subsequent value activity. In a book on price patterns, Martin King first described this trading system... Later, it became a popular strategy based on a universal chart pattern.
This strategy provides for low-risk signals. At the same time, the number of positions opened using this strategy without losing finances can be a huge amount. Naturally, for this it is necessary to correctly use the stop loss. But when using the system, it is important to place a pending order in a timely manner. Support levels are also difficult to formalize.
How to apply the Pin Bar strategy?
Now, let's move on directly to using this system in work. For work, absolutely any currency pairs are suitable for us. It is recommended to use long-term timeframes in this case.
The above picture shows a pattern with 3 bars. Formation of the species: - two eyes and a nose. The first value should be an ascending bar. It is for a bullish bar. In this case, the "Nose" must be opened and closed inside the "left eye". Moreover, its maximum must necessarily protrude beyond the maximum of the other eye. Close levels as well as nose open levels should be located in the upper quarter of the bar.
For a good pattern, an excellent additional condition can be the presence of stable support and resistance levels. The stronger these levels are, the more accurate the pattern will be.
You can also use the Pinbar-Detector indicator designed for trading on the basis of MetaTrader. This will significantly automate the pattern finding procedure.
In this case, a retracement of the value beyond the level of the left eye is considered a rather aggressive entry point. However, the conservative entry point in this case is the fall in value below the nose.
It is interesting to note that a conservative stop loss can be set even behind the nearest support level and "eyes". Of course, a less conservative approach could be to place a stop loss on the nose.
- It is better to set a conservative take profit immediately after the minimum level of the "left eye".
- As for the aggressive take profit, it is better to set it further, mainly at the next support level.
Forex strategy based on pin bars
In this article, we will look at what a Pin Bar trading strategy is for Binary Options and Forex. Also here you will find tips on its use and settings.
The Pin Bar system is one of the most popular among beginners and professional traders. You can use it with any financial markets(stocks, forex, binary options, etc.). Its main advantage is that it displays signals with a reliability indicator of 90%.
Despite this high value, many traders manage to lose their deposit when working with this strategy. Let's take a look at how to trade this candlestick pattern correctly and achieve acceptable profitability results.
Recognizing a pattern on a chart
It is quite easy to recognize the pin bar on the quote chart. This pattern is a long candlestick with a small body and a large shadow (it is desirable that the body is at least 4-5 times the smallest candlestick size). The pin bar shadow is directed both against the local trend and along it. In most cases, a pattern is formed at the lows and highs, which signals the imminent end of the trend.
Contracts should be opened in the direction opposite to the direction of the candlestick shadow. For example, if the pattern shadow is directed upwards, it is necessary to purchase PUT options, and if the pin bar “looks” downwards, then you should give preference to CALL deals.
Increase
The screenshot above shows the formed pin bars. The first 3 patterns were formed at the end of the corrective movement, which is a signal about the end of the local trend. The 4th last pin bar was formed at the peak of the global trend, and after it a downward reversal took place.
Trend trading system
The safest and no less profitable was the use of the pin bar pattern. How, then, should you trade with the trend using the pin bar, if the given candlestick pattern is just a reversal? Quite simply, the presence of any correction that forms in the direction of the main trend after an impulse movement can be a local trend.
Pin bar may well become a signal of the end of this local trend. When this pattern has formed, then at the end of the correction, the price will again have a direction of movement in the prevailing trend. At the moment, it is much safer to open trading position than when working with a counter-trend strategy.
Increase
The above screenshot demonstrates entry points for this trading system. From there you can see that the system works flawlessly. Prices continue to move down even after the pin bar appears, and all deals opened on them have been completed successfully.
Counter-trend trading using the pin bar pattern
A trading system based on the pin bar candlestick pattern is more profitable than the trend one, but also more dangerous, since any executed transactions against a global or local trend entail a very high risks... If skillfully applied this system, a trader can get excellent income. Professionals in the BO market multiply their deposits every month by 50 - 80%, simply by using only the candlestick pin bar pattern to search for entry points.
Increase
The system is quite simple, if a pin bar with a long shadow, which is directed upward, appears on the chart during a prolonged growth, then in the near future there will be either a deep correction or a trend reversal. In this situation, it is advisable to purchase PUT options. The expiration date should be on the selected timeframe 4 - 5 candles.
Choosing a currency pair
Traders often use currency pairs with medium and high volatility for pin bar trading. Low-volatility assets (EUR / GBP, AUD / NZD, NZD / CHF and others) are not suitable for this, since price noises often appear on the charts with them, and this negatively affects the signal processing. Medium and high volatility pairs include USD / CAD, GBP / USD, EUR / USD and others.
It is not yet recommended to trade pin bar with cross rates and exotic currency pairs... It is advisable to choose "pound" or "dollar" assets, since they lend themselves much better to candlestick and technical analysis than exotic currencies and cross rates.
Brokerage companies offer higher rewards for successful transactions on options with these assets (80 - 90%), and premiums for cross rates are generally no more than 60-70%. According to the pin bar pattern, the strategy works well when trading options on the oil, silver, gold and other raw materials markets.
Peculiarities
The probability of a successful outcome of the acquired contract depends on the length of the pin bar shadow and on the number of these patterns. If the chart shows not 1, but 2 or more consecutive pin bars at once, this will only strengthen the signal. The more patterns are formed, the faster the trend reversal and the deeper the subsequent correction will be carried out.
It should be remembered that you should buy BO using pin bar signals only if these patterns were formed near critical zones - resistance and support levels. These levels are recognized and indicated on the chart in three ways:
- Drawn on newly formed lows and highs of horizontal lines.
- Construction price channel and its lower and upper charts provide support and resistance to value.
- Using a volume indicator and looking for areas on the chart where sharp spikes in volumes were seen.
Often, in these zones, critical levels are formed, in the future from which the value can rebound more than once and create 1 or 2 pin bar in a row.
Graphical parameters and functions of indicators
To "reinforce" signals for entering the market using the pin bar pattern, you can use different types oscillator indicators. In the form of such, MFI is perfect, and others. For example, if a pattern has formed at the maximum, and the candlestick's shadow is directed up, then there is no need to rush to open a PUT trade.
You need to plot the Stochastic oscillator on the chart with quotes and see in which zone the signal line is located. When it is in the neutral zone (between 20 and 80 levels), the signal is classified as weak. If the signal line has passed into the critical upper zone, then this signals that this asset is overbought strongly. It turns out that you can safely purchase binary option"Below".
Increase
If the opposite picture is shown on the chart (in the oversold zone, 1 or 2 pin bars with down shadows, bearish trend), then you can buy BO “Higher”.
Pin bars are formed at absolutely any time intervals - from 15 seconds to annual. More candles are formed on small timeframes for an identical time period than on large and medium ones, therefore, it is preferable to trade on M15, M5 and M1. For example, if in 1 day only 1 pattern is formed on the hourly chart, which signals that the local trend has reversed, then during such a period on the one-minute chart the trader will be shown several dozen similar patterns. candlestick patterns.
Exists important nuance that the larger the timeframe is chosen for the trading process, the more reliable the signals will be. On the M1 time section, the pin bar shows reliable signals in 75 - 80% of cases. On timeframes of 1 hour and 4 hours, their reliability increases to approximately 90 - 95%. It turns out that the trading system gives the best results on the given time intervals.
Trading signals
This trading system involves entering the market in the direction of the hammer. Here we will pay attention to how the candlestick body is located, and not to the color characteristic of the bar. It turns out that it is possible to make an acquisition of an increase contract even when the pin bars are black on the chart.
Signal to rise
Increase
You should buy the Above option when the following conditions are met:
- A bullish pin bar has formed on the chart.
- When the pin bar maximum is broken, a deal is opened.
- The deal is opened with an expiration time of 3 candles on the chart where the analysis was carried out.
Signal for a fall
Increase
An option "Below" must be purchased when the following criteria are met:
- A bearish pin bar has formed on the chart.
- The body of the pin bar must be inside the body of the previous candlestick.
- When the pin bar low is broken, a trade is opened.
- The deal is opened on the chart where the analysis was carried out.
Reducing risks
To reduce the risk of acquiring an unsuccessful order, you can purchase options only in the direction of the global trend, for example, during a correction. If there is no clear-cut correction in the market, then you should refuse to enter the market. If there is a consolidation in the market, it is not recommended to use this trading scheme.
The expiration time should be 3 candles. If large time intervals are selected for analysis, then the expiration time can be taken shorter. When using a timeframe older than one hour, the expiration time can be reduced to the 1st candlestick. On a different hourly timeframe, you do not need to decrease the expiration time.
If a trader has chosen this trading system, then you need to pay attention to the size of the candles. A good pin bar should be equal in size to the length of the middle candle. It is by the length that the distance traveled is determined by the cost. If the pin bar has a range 2 times less than the range of the previous bar, then it is better to refuse to enter the market.
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