• What is a pin bar?
The pin bar is a price action strategy that shows rejection of a price level. A pin bar is a bar with a long upper or lower shadow (tail), and with the open and close near the same level. See this example image:
In the image above we can see an example of a bearish pin bar and a bullish pin bar. A bearish pin bar is a pin bar that shows rejection of higher prices and implies that price may move lower, thus it is “bearish”. A bullish pin bar shows rejection of lower prices and implies that price may move higher, thus it is “bullish”.
• How do I trade pin bars?
A bearish pin bar should ideally be traded in the context of a downtrend. A bearish pin bar in a downtrend shows that higher prices are still being rejected and thus the trend has a high probability of continuing. Typically, the ideal stop loss placement for a bearish pin bar is just above the high of the upper shadow.
A bullish pin bar should ideally be traded in the context of an uptrend. A bullish pin bar in an uptrend shows that lower prices are still being rejected and thus the trend has a high probability of continuing. Typically, the ideal stop loss placement for a bullish pin bar is just below the low of the lower shadow.
Pin bars can also be traded against the trend, but this is a more advanced way to trade them and takes a bit more refined discretionary trading sense. Counter-trend trades are naturally lower-probability than trades with the trend, so you must use extreme caution when trading pin bar price action trading strategies against the trend, or any strategy against the trend for that matter.
• Pin bar strategies in action:
In the daily GBPUSD chart below we can see numerous pin bar strategies that worked out quite nicely. Now, not every pin bar setup is going to work out, just like any other trading strategy or system, pin bars sometimes fail. This is why you must always manage your money properly and not over-trade in the Forex market. All trading systems and strategies have losers, and anyone who tells you otherwise is probably trying to scam you. However, the pin bar is one of the most accurate forex price action strategies you will come across.
• Other pin bar considerations:
While pin bars are indeed a staple price action strategy, you still must learn how and when to trade them, this article gave you a brief introduction to pin bars and a definition of what they look like and what they are. For more information you should consult a ‘price action expert’ by learning to trade price action pin bar strategies from a professional forex price action trading course. There are many nuances to pin bars and all price action strategies that are most effectively and efficiently learned from a pro trader.
