subject: Pin Bars- Best Price Action Setup [print this page] Pin Bars- Best Price Action Setup Pin Bars- Best Price Action Setup
Pin bars are a very profitable way of trading the forex markets. They are my bread and butter price action setup and I especially like them when they occur on the daily charts.
Most traders are looking for fancy systems and robots, and that once they have this they will be able to make huge amounts of money. Sadly for a lot of people this is a route to frustration and a ruined account. There is however another way and I will endeavour to explain what it is.
Price action trading is the study of price, how it moves, and where it moves. By looking at how and where price is moving we can make trading decisions based on the analysis. My favourite price action setup in the forex market is the pin bar. The pin bar is a long tailed candle that shows rejection of a certain direction in the market. If price is seen to reject a certain area its logical to assume that there is a good chance that it will go in the opposite direction to this rejection.
Pin bars work best with confluence, this means where everything aligns and points to higher or lower prices. The best one is a support or resistance level. These are areas where the market has stalled at in the past and have reversed. This is because buyers and sellers have come in to drive price in the opposite direction. Now suppose price has come up to a level where the market fell in the past and forms a pin bar with a long upper tail. This is showing us that price is rejecting higher prices, but not only that, it shows us that the resistance level has held again, and we can see that there was a change in sentiment at this level.
Other confluences include momentum or the trend. I always like to trade with the trend, and when I see price pull back and form a pin bar I am all over it. My favourite setup is the break out and retest. This is where a key level gets broken, and very often price will come back and retest this level. Old resistance will become new support, and vice versa. If on the retest a pin bar is formed, we have a high probability entry, and I am usually all over it.
Price action trading is not a system, it involves discretion on the traders behalf to identify high probability setups. But given time and practice it is very possible to become a consistent winner using simple price action analysis. However I will say trading price action successfully goes beyond being able to find a pin bar. You need to get to a point where you can read a chart, this is something totally different than what most people do. Once you spend enough time looking at price action, you will start to see things that perhaps others don't see which you can use to your advantage. Again time and practice is need to get to a point where you can do this and it will not happen over night.
I genuinely believe that with good money management and a sound trading mindset anyone can make money with daily price action setups like pin bars. But don't expect 500% per month, something in the region of 50-100% per year is more likely from a good trader.
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