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Pin Bar Strategy

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The standard Pin Bar Strategy can be much more profitable by ignoring the so called Forex experts (traditional) approach

Here’s how...

This subject and many others are covered in more detail in the FREE Forex Guide available at Forex Useful - http://forexuseful.com/new/members/21812-forex-guide/

Published in: Education
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Pin Bar Strategy

  1. 1. A Better Pin Bar Strategy The standard Pin Bar Strategy can be much more profitable by ignoring the so called Forex experts (traditional) approach Here’s how...
  2. 2. BULLISH Pin Bar Long “tail” (also called the “wick” or “shadow”) BELOW the “body” Small “nose” (Or none at all) Small “body” preferably Green (Close above Open) BEARISH Pin Bar Long “tail” (also called the “wick” or “shadow”) ABOVE the “body” Small “nose” (Or none at all) Small “body” preferably Red (Close below Open) Pin Bar Characteristics
  3. 3. ENTRY On a break above the High of the Pin Bar (Low for a Bearish Pin Bar) STOP Almost all “experts” advice a Stop below the Low of the Pin Bar (Above the High for a Bearish Pin Bar) TARGET Almost all Forex experts advise a Target of equal Risk/Reward, calculated as Entry + (Entry – Stop) for a Bullish Pin Bar trade or Entry - (Stop – Entry) for a Bearish Pin Bar trade Forex Experts Pin Bar Strategy
  4. 4. A Better Pin Bar Trading Strategy Entry and Target... ENTRY As per the Forex Experts... On a break above the High of the Pin Bar (Low for a Bearish Pin Bar) TARGET As per the Forex Experts... A Target of equal Risk/Reward, calculated as Entry + (Entry – Stop) for a Bullish Pin Bar trade or Entry - (Stop – Entry) for a Bearish Pin Bar trade
  5. 5. A Better Pin Bar Trading Strategy Entry and Target example... ENTRY On a break above the High of the Pin Bar ENTRY = 1.5250 TARGET ENTRY + (ENTRY – Low of the Pin Bar 1.5010)) REWARD = 240 PIPs so our TARGET = 1.5490
  6. 6. Having defined our ENTRY and TARGET it’s time to make the Pin Bar strategy better by analysing the STOP... We already know that our ENTRY is... A break of the High 1.5250 (Low for a Bearish Pin Bar) Because we know our TARGET 1.5490 we also know our potential REWARD... TARGET – ENTRY (240 PIPs) (ENTRY - TARGET for a Bearish Pin Bar) A Better Pin Bar Trading Strategy Entry and Target analysis...
  7. 7. As seen in the example, having defined our ENTRY and TARGET we know our REWARD (240 PIPs) Now it’s time to make the Pin Bar strategy better by looking at that STOP to define our RISK Here we can be as aggressive (or not) as we want... By defining our Risk:Reward profile we are able to calculate our RISK (STOP) We can go for anything here, from 1:4 to 1:8 or anything else for that matter A Better Pin Bar Trading Strategy Stop analysis...
  8. 8. A Better Pin Bar Trading Strategy Stop example... We already know our ENTRY A break above the High of the Pin Bar, it is 1.5250 We also know our TARGET ENTRY + (ENTRY – Low of the Pin Bar (1.5010)), it is 1.5490 It means our REWARD is 240 PIPs Lets now go with a Risk:Reward profile of 1:6 so we can calculate our RISK (STOP)... With a REWARD of 240 PIPs our RISK (STOP) can be calculated as 240/6 which is 40 PIPs, 1.5210
  9. 9. A Better Pin Bar Trading Strategy Example Trading plan (part 1)... To trade this Pin Bar we now need a Market order that looks like this... BUY at 1.5250 with a STOP at 1.5210 (RISK 40 PIPs) and a TARGET of 1.5490 (REWARD 240 PIPs) If the breakout is successful first time we make a 1:6 Risk:Reward If it is unsuccessful (we get stopped out) we place our order again...
  10. 10. A Better Pin Bar Trading Strategy Example Trading plan (part 2)... We can be wrong up to 5 times! If stopped out we place the same Market order again We always make MORE money than the “experts” So... If the first breakout trade is successful we make 6 times MORE money than the “experts” If the second breakout trade is successful we still make more money than the “experts”, etc.
  11. 11. Produced by If the 5th breakout trade is unsuccessful it means we have lost less than the “experts” We can at this point stop placing orders and conclude that this Pin Bar set up is invalid and look for the next opportunity An opportunity to, once again, make much more than the “experts” A Better Pin Bar Strategy

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