Is There Another Way to Trade Pin Bars?
If we think about it, the process of trading isn’t quite as complicated. Strip it down to the most basic element of trading and you’ll know what this means. What is the most basic element in forex trading?
Trading essentially involves buying a security at a specific price, then selling the same at a higher price.
The same rule goes when selling a security. Traders execute this with fundamental and technical analysis, to help gain identification of momentum and price direction.
Despite this analysis, there is a major question in the mind of every trader. Where is price headed in the market? This is where pin bar trading strategy comes in the picture.
What Is Pin Bar?
Short for ‘Pinocchio Bar’, this strategy features a single candlestick setup. Using guidance from this setup, price action traders find about potential reversals in the market before they occur. There are many ways to trade pin bars;
Avoid Trading Pin Bars That Form after Large Movements Occur
This is one of the most ideal ways to ensure a high success rate. Don’t trade pins that form immediately after a large movement in the market takes place. Regardless of how these pins are constructed or which technical levels they merge with, probability of success is quite low.
Always Trade Pin Bars That Occur From Trades Placed By Bank Traders
A common and unfortunate about pin bars is that ‘all form in the market for the same reason’ i.e. because traders usually place trades to make market reverse. This assumption is wrong. It’s also the main reason why some traders are unable to make consistent money, trading pin bars.
What are the types of pins traders should be trading instead? The same that form when bank traders place trades in the market….
Only Trade Pins Which Form During Active Market Hours
This tip for trading pin bars is pretty obvious; yet most traders are guilty of trading at odd hours in a day. Your best bet at trading pin bars is to trade exclusively during the time a currency is being actively traded. Avoid trading pins which form when the market is inactive!
For example: EUR/USD is most commonly traded between the time of the start of London trading session (at 7 a.m.) and end of US session (10 p.m.). After active market hours ends, volume starts to drop significantly because most of the banks participating in active EUR/USD trade close down. The price isn’t going up and down as a result of any big orders in the market.
With just a little bit of practice, traders of any level will be able to spot trends, price movements etc, tailoring their strategy accordingly.