Trading the Daily Pin Bar comes in a few different entry options. Discussed here is one of them. It is a simple trading technique that ensures you trade with low risk and a Short Stop Loss distance.
For its time frames, you need to take note of the difference between the 4hr chart time and the 1hr chart time.
Any of the known Currency Pairs may be observed, and no Forex Indicators are present.
Many Forex traders would trade the Daily Pin Bar in this method:
- once the high of the Daily Pin Bar is broken, a Buy Order is commenced
- afterward, a Stop Loss is placed beneath the low of the Pin Bar
Some analysts would assent that this might not be the best way of trading the Daily Pin Bar on the following counts:
- Daily Pin Bars are unusually long candlesticks. This means your Stop Loss distance would be wide; it would be anywhere from 100-150 pips or more depending on which currency pair.
- This also means that the place you entered your trade might not be a sound one; a more extended time might be needed before you see a profit.
The question now is: does a Low Risk Entry technique or method exist?
Yes. There is a sounder way to trade the Daily Pin Bar that ultimately avoids vast stop loss distance.
Forex Trading Strategy Rules for the Daily Pin Bar
Use the chart below and the rules to further your understanding of the trading strategies:
- Once the Daily Candlestick has formed, the next step is to identify if it’s a pin bar or not.
- If it is a Pin Bar, switch to either the 4hr or 1hr time frame, depending on your preference.
- If you are in smaller time frames like the 1hr or the 4hr, you need to monitor and wait for the price to go down.
- The Buy Entry Candlestick refers to the candlestick that takes out the high of the candlestick that came before. This signals you that you are already allowed to place a Buy Stop Order above the top of that candlestick. This also means that you can place your Stop Loss a few pips below the low of that candlestick.
- If you are stopped out, be on the lookout for the next Buy Entry Candlestick. The Buy Entry Candlestick happening within the high and low range of the pin bar is preferable.
With this trading technique, you will have a Low-Risk Entry in anticipation of a breakout of the high of the Daily Pin bar. As this is the case, you would want to get into a Low-Risk Entry trade before the breakout happens.
Daily Pin Bar Forex Trading Strategy Advantages:
- Being able to switch between the 1hr and the 4hr timeframes in search of the Buy Entry candlestick permits you to enter early before a breakout when the Daily Pin Bar high is broken to the upside.
- This also means low-risk entry; instead of a 100 pips Stop Loss on the Daily time frame pin bar, it is possible to enter a trade with 25 pips Stop Loss through 1hr or 4hr time frames.
- Should a valid and promising breakout happens, making a lot of profitable pips can quickly be done.
- When a Pin Bar forms in the daily time frame, much attention is given by numerous breakout traders who would stack their buy orders just above the Pin Bar’s high. This they do in anticipation of a breakout. As such, once price hits these orders, the markets shoot upwards immediately.
- It is worth paying attention to Daily Pin Bars that form around strong areas of Support. This is advised as numerous traders would be monitoring it.
Daily Pin Bar Forex Trading Strategy Disadvantages:
- The fact of the matter is, not all Daily Pin Bars may have active breakouts should their highs break.
- Not all of the Pin Bars would be good to trade. You should focus on Pin Bars that form on support levels or primary fib levels and pivot points.