Pinbars are dead easy to spot, and are a most reliable way to spot a good trade entry opportunity in my experience.
The pinbar is also known in candlestick parlance as a Hammer, for bullish entries, or Shooting Star / Inverted Hammer, for bearish entries.
I use 1-Hour or higher charts to spot potential entries, never lower timeframes.
A good long tail, with a small real body, is a prerequisite.
To enter, there are two basic approaches:
1. For long pinbars, seek to enter perhaps halfway into the Pinbar, on a re-trace.
This is cost-effective, but can mean losing a great trade if the retrace doesn't actually happen in practice.
2. Just go in directly on close of the pinbar.
This may cost you more in terms of Stop Loss, but means you don't miss potentially great trades waiting for a retrace that doesn't occur.
Stop Loss is always placed several PIPs beyond the tail of the pinbar.
Confidence in the entry is increased when you can see confluence with important S+R level(s), for example:
1. Key Fibo level, typically 50% or 76.4% retracements.
2. Significant Fibo extension level, eg 127.2% or 161.8%.
3. Notable S+R level created within the previous 24-48 hours trading.
4. BRN (Big Round Number) levels sometimes, eg x50, x00 levels.
Pinbar trades usually offer a very good Reward:Risk Ratio - I would seek a minimum 2:1, often 3:1 or better.
After the initial push away from the pinbar entry, you can often lock away your risk to break even quite early in the trade.
Managing your risk
Of course, by definition, pinbar trades are often counter-trend trades, going against the prevailing trend of the moment, so be fully aware of this before you enter.
If you want to minimise risk, choose only those pinbar entries that lead to a resumption of the trend after a retrace.
Just choose your own favourite approach, which could be one of the following:
1. A given Reward:Risk achievement, eg 3:1 or greater.
2. Key S+R level, eg 50% or 76.4% Fibo level.
3. Trailing Stop.
Here I'll post some examples of pinbar trades on 1-Hour or longer timeframe charts.
Please note that I trade primarily on Price Action alone.
(I can't deny also keeping half an eye on the 20 (Red) and 50 (Blue) EMAs, to see if they are telling me anything useful.)
Perfect 1-Hour chart Pinbar / Shooting Star on the EJ this morning at 7:00 am BST, a reaction off the 161.8% Fibo extension of the previous rundown ... in profit already, with +1 PIP locked in.
Locking in early means I am risking getting knocked out on a retrace before the pinbar trade develops fully, but I reckon living to fight another day is never a bad approach.
When to exit this EJ short trade?
Conservative approach would maybe be to take it out around 126.56, confluence of previous S+R level and the 50% Fibo.
Alternatively, assuming you already have your risk locked away anyway, is to see if it wants to run all the way to the 76.4% Fibo at 126.31.
News? Only some medium impact GBP-related stuff at 9:30 am BST, which I would not expect to shake the EJ much.
Turns out that the counter-trend drop off the pinbar didn't go that far, although there were 23 PIPs you could have made out of this trade if you'd got in at the close of the pinbar and got out at the bottom.
In my case, my trade came out on its stop loss of break even +1 PIP. One lives to fight another day!
If you are risk-averse, avoid counter-trend trades such as this one.
Instead, wait for the retrace to complete and use pinbar entries to get back in to a prevailing trend.
Your example shows how well pinbars can work on longer-term charts, such as 4-Hour and Daily charts.
Thanks for thread loudoniii, just spotted nice one on the dax and ok one on the USD CAD
The 11:00 am BST 1-Hour candle on the USD/CAD has a rather fat real body, and its tail is definitely not at least 3 times the length of the real body.
So I personally wouldn't class it as a pinbar really, though price does seem to be reversing there at the moment!
It's been a pretty dull trading morning here in London, so I'm hoping for a bit more life once New York opens at 13:00 BST (08:00 EST).
Agreed, pin bars at confluence areas usually work well. But they work far better when traded in the direction of the main trend.
Trade safe and prosper.
I am happy that we have this understanding on this thread. It's a good thread and it can be interesting to see how traders fare with how they use pin bars. Personally, I like a retracement to the 50/62 Fib area/band. I don't mind missing any market move as I love a high reward--to-risk ratio.
Trade safe and prosper.
Another point will be using a two time-frame approach with a limit order. You use the higher tf for the setup and enter the trade on a lower tf.
This thread here had a pretty good indicator for a special type of Pin Bar
I'll check if it still works
Low volume (or falling volume) pin bars (in reality the one at the top is a "shooting star" and the one at the bottom is a "hammer") indicates just simple lack in interest in continuation of the move (up or down)...however if you are looking for the reversal, you will need to see that same bar on RISING volume showing that to spite all the selling, the bar finished well off the lows...and a buyers are absorbing that selling.
Best of luck
The number is the bars since price at that level
Which is no guarantee of anything but an interesting statistic
Can you fix the title of the thread or need Admin to help?
Good luck all
After searching Google to see if there is anyone else who trades with pins and fibo extensions, I found this thread and I'm glad I did
How do you draw the fibo extension?
Everywhere I see people draw it between the latest swing high and low but I use it a bit differently. When I see a swing high or low, I start drawing a fibo extension, aligning the %23.6 extension with the first pullback after the swing low/high. Sometimes price behaves so well aligning to fibo retracement levels, you feel like you can predict the future. Also I only enter in the general direction of the price.
See the attachment.
What is that tool you show there, if that is Metatrader, must be a special custom indicator
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