Trading Pin Bars – Love Hate Relationship

Trading pin bars is a price action approach that are used as part of a Forex trading strategy.  From a daily chart to an intra-day trading chart, pin bar trading is a popular approach used by traders looking to find a reversal in the market using price action.

From neat names like shooting star and hammers (even hanging man), pin bar candlesticks give you an exact trade entry and stop loss that you can use when placing a trade.


What Are Great About Pin Bars

Unlike chart patterns (sometimes called chart art) that can be different from trader to trader and even lack consistency with a trader, pin bars are easy to spot.



Any trader could instantly look at their chart and notice these two different candlesticks.  You can notice the long shadows on each of them as well as the obvious body of the candlestick.

  1. This would be a bullish reversal candlestick and while this body is green, it could also be red and have the same meaning.  Traders may look at a red bullish reversal as less convincing
  2. This a bearish reversal candlestick.  The main different is the location of the shadow – on the top of the body of the candlestick.

Trading with pin bars will give you exact entry location and stop loss locations:

stops and targets


When a pin bar occurs in the location of interest, you can place an order to:

  • Buy the market by placing your entry at the black line of the bullish reversal candlestick
  • Sell the market by placing your entry at the black line of the bearish reversal candlestick

Our stop loss is the exact opposite end of the pin bar as noted by the red lines.  Please note that you should never place it directly beyond the shadows.  Allow yourself some buffer room in case price probes the area.


Pin Bar Trading Strategy At Levels

Pin bars are going to appear every place on your chart but not all of them are worthy of a trade.

I would only look for pin bars at important structure locations on the chart such as support and resistance zones and even Fibonacci levels.  The great thing about this strategy is you will be forced to be disciplined in your trading approach.



Looking at this chart, the first arrow points to a pin bar that came into the .618 Fibonacci level.  Do you remember how you would enter the trade on the pin bar?

  1. Your entry price would go just over the high of the reversal pin bar
  2. Your stop loss would go some pips (in this case) below the lower shadow

The second arrow shows the right pin bar coming into the location of the first pin bar.  We are looking at the first pin bar giving us a potential support level.  Once the pin bar shows up, you’d use the entry and stop loss strategy we already have covered.

This pattern will repeat itself on every instrument and every time frame.

TIP:  These candlesticks show a trend reversal and it could simply be a corrective move (down trend on lower time frames) so you may want to trade in the direction of the primary price action trend.  You can use a moving average or the price trend structure to determine the trend direction.


The Worst Part Of A Pin Bar Strategy

While there are many pluses about trading pin bars, there is one drawback that you must pay attention to.

Remember that the shadows can give us objective places to put our stop loss.  The stop loss will depend on the overall length of the shadow of the pin bar.  If the shadow if very long, you will be forced to have a wider stop which will result in a smaller position size.

On a 5 minute chart, that may not be a big deal.  If you are swing trading a daily chart, we are already looking at a larger range and if the pin bar gives a huge shadow, you may be increasing the average stop by many pips.

But you must do that.

Trades will be invalidated when the lows or highs of the shadows are taken out by a good measure.

In a Forex trading strategy, you have the option of using odd lot sizes but in markets such as Futures, you are limited by the size of the e-mini contract.  You may have to sit aside on some trades that have large pin bar shadows.

Longer shadows, depending on time frame, could be showing you an exhaustion move and a strong rebound is generally coming.  Try to get involved in these using proper risk management.


My Trading Experience With Pin Bars

I don’t just look for a pin bar at support and/or resistance area as I have many tools I can use to enter a trade. For a newbie trader or a trader just looking to simplify and avoid over trading, pin bar strategy is a good one to look at using.

I look for pin bars in congestion areas in terms of probes around support and resistance areas which help determine which force, bulls or bears, are going to take the market.  It’s not perfect but the shadows are great to see who is really in control.

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