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Pin Bar Forex Trading Strategy – Pin Bar Definition

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An Introduction To The Pin Bar Forex Trading Strategy and How to Trade It Effectively…

The pin bar formation is a price action reversal pattern that shows that a certain level or price point in the market was rejected. Once familiarized with the pin bar formation, it is apparent from looking at any price chart just how profitable this pattern can be. Let’s go over exactly what a pin bar formation is and how you can take advantage of the pin bar strategy in the context of varying market conditions.

What is a Pin Bar?

The actual pin bar itself is a bar with a long upper or lower “tail”, “wick” or “shadow” and a much smaller “body” or “real body”, you can find pin bars on any stripped-down, “naked” bar chart or candlestick chart. We use candlestick charts because they show the price action the clearest and are the most popular charts amongst professional traders. Many traders prefer the candlestick version over standard bar charts because it is generally regarded as a better visual representation of price action.

Characteristics of the Pin Bar Formation

• The pin bar should have a long upper or lower tail…the tail is also sometimes called the “wick” or the “shadow”…they all mean the same thing. It’s the “pointy” part of the pin bar that literally looks like a “tail” and that shows rejection or false break of a level.

• The area between the open and close of the pin bar is called the “body” or “real body”. It is typically colored white or another light color when the close was higher than the open and black or another dark color when the close was lower than the open.

• The open and close of the pin bar should be very close together or equal (same price), the closer the better.

• The open and close of the pin bar are near one end of the bar, the closer to the end the better.

• The shadow or tail of the pin bar sticks out (protrudes) from the surrounding price bars, the longer the tail of the pin bar the better.

• A general “rule of thumb” is that you want to see the pin bar tail be two/thirds the total pin bar length or more and the rest of the pin bar should be one/third the total pin bar length or less.

• The end opposite the tail is sometimes referred to as the “nose”

pin bar trading strategy

Bullish Reversal Pin Bar Formation

In a bullish pin bar reversal setup, the pin bar’s tail points down because it shows rejection of lower prices or a level of support. This setup very often leads to a rise in price.

Bearish Reversal Pin Bar Formation

In a bearish pin bar reversal setup, the pin bar’s tail points up because it shows rejection of higher prices or a level of resistance. This setup very often leads to a drop in price.

bullish and bearish pin bar reversal diagram

Examples of the Pin Bar Formation in Action

Here is a daily chart of CAD/JPY, we can see numerous pin bar formations that were very well defined and worked out very nicely. Note how all the pin bar’s tails clearly protruded from the surrounding price action, showing a defined “rejection” of lower prices. All of the pin bars below have something in common that we just discussed, can you guess what it is?

pin bar trading example

If you said that all the pin bars in the above chart are “bullish pin bar setups”, then you answered the question right. Good job!

In the following daily USD/JPY chart we can see an ideal pin bar formation that resulted in a serious move and trend reversal. Sometimes pin bars like this form at significant market turning points and change the trend very quickly, like we see below. The example in the chart below is also sometimes called a “V bottom reversal”, because the reversal is so sharp it literally looks a V…

pin bar definition

Here is an example of a trending market that formed numerous profitable pin bar setups. The following daily chart of GBP/JPY shows that pin bars taken with the dominant trend can be very accurate. Note the two pin bars on the far left of the chart that marked the start of the uptrend and then as the trend progressed we had numerous high-probability opportunities to buy into it from the bullish pin bars shown below that were in-line with the uptrend.

pin bars in trend

How to Trade a Pin Bar Formation

The pin bar formation is a reversal setup, and we have a few different entry possibilities for it:

“At market entry” – This means you place a “market” order which gets filled immediately after you place it, at the best “market price”. A bullish pin would get a “buy market” order and a bearish pin a “sell market” order.

“On stop entry” – This means you place a stop entry at the level you want to enter the market. The market needs to move up into your buy stop or down into your sell stop to trigger it. It’s important to note that a sell stop order must be under the current market price, including the spread, and a buy stop order must be above the current market price, including the spread. If you need more help on these “jargon” words checkout my free beginners forex course for more. On a bullish pin bar formation, we will typically buy on a break of the high of the pin bar and set our stop loss 1 pip below the low of the tail of the pin bar. On a bearish pin bar formation, we will typically sell on a break of the low of the pin bar and place a stop loss 1 pip above the tail of the pin bar. There are other stop loss placements for my various setups taught in my advanced price action course.

“Limit entry” – This entry must be placed above the current market price for a sell and below the current market price for a buy. The basic idea is that some pin bars will retrace to around 50% of the tail, so we can look to enter there with a limit order. This provides a tight stop loss with our stop loss just above or below the pin bar high or low and a large potential risk reward on the trade as a result.

pin bar trading entry types

To effectively trade the pin bar formation you need to first make sure it is well-defined, (see pin bar characteristics listed at the top of this tutorial). Not all pin bar formations are created equal; it pays to only take the pin bar formations that meet the above characteristics.

Next, try to only take take pin bars that are displaying confluence with another factor. Generally, pin bars taken with the dominant daily chart trend are the most accurate. However, there are many profitable pin bars that often occur in range-bound markets or at major market turning points as well. Examples of “factors of confluence” include but are not limited to: strong support and resistance levels, Fibonacci 50% retracement levels, or moving averages.

Pin bar in range-bound market and at important market turning point (trend change):

In the chart example below, we can see a bearish pin bar sell signal that formed at a key level of resistance in the EURUSD. This was a good pin bar because it’s tail was clearly protruding up through the key resistance and from the surrounding price action, indicating that a strong rejection as well as false-break of an important resistance had taken place. Thus, there was a high probability of a move lower after that pin bar. Note the 50% limit sell entry that presented itself as the next bar retraced to about 50% of the pin bar’s length before the market fell significantly lower…

pin bar 50 percent entry

Pin bar in-line with trend with multiple factors of confluence:

In the chart example below, we are looking at a bearish pin bar sell signal that formed in the context of a down-trending market and from a confluent area in the market. The confluence between the 8 / 21 dynamic EMA resistance layer, the horizontal resistance at 1.3200 and the downtrend, gave a lot of “weight” to the pin bar signal. When we get a well-defined pin bar like this, that has formed at a confluent area or level in the market like this, it’s a very high-probability setup…

pin bar with confluence

Other names you might find pin bars described by:

There are several different names used in ‘classic’ Japanese candlestick patterns that refer to what are basically all pin bars, the terminology is just a little different. The following all qualify as pin bars and can be traded as I’ve described above:

• A bearish reversal or top reversal pin bar formation can be called a “long wicked inverted hammer”, “long wicked doji”, “long wicked gravestone”, or “shooting star”.

• A bullish reversal or bottom reversal pin bar formation can be called a “long wicked hammer”, “long wicked doji”, or “long wicked dragonfly”.

In Summary

The pin bar formation is a very valuable tool in your arsenal of Forex price action trading strategies. The best pin bar strategies occur with a confluence of signals such as support and resistance levels, dominant trend confirmation, or other ‘confirming’ factors. Look for well formed pin bar setups that meet all the characteristics listed in this tutorial and don’t take any that you don’t feel particularly confident about.

Pin bars work on all time frames but are especially powerful on the 1 hour, 4hour and daily chart time frames. It is possible to make consistent profits by only trading the pin bar formation, and you can learn more about it in my price action trading course. Upon adding this powerful setup as one of your main Forex trading strategies, you will wonder how you ever traded without it.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008. Checkout Nial’s Forex Course here.

72 comments - Click Here to Leave a Comment

  1. abraham says:

    Nial, your lecture on pin-bar strategy lecture is very unique and self explanatory. It gave me insight to how those

    candle sticks works. thanks . God bless you Nial

  2. felistas says:

    like the topic, very helpful

  3. jeff obada says:

    stuffs we overlook….thanks man

  4. solomon says:

    Brilliant! I have seen manifestations of these ideas

  5. Tipu says:

    Wow thanks i m gonna learn pinbar price action

  6. Paresh says:

    Good tutorials and explained very good. Will keep coming back to this website. Particularly interested in trading on pin bar formations

  7. mideel says:

    Thank you so much sir for a lot of the tutorials and advices like this.

    You have helped a lot of traders out there who are interested in price action.

  8. Gary says:

    This is great!recently i found this site which is good too.I tried and make some money with forex and getting very interested about forex now!

  9. Masood says:

    Very well explained. After reading about half a dozen books and watching countless videos about different forex systems , methods and strategies , I have come to conclusion that pure price action is the way to go when trading forex and will be enrolling in your course. Good job Nial..

  10. sophal says:

    thank you very much I will learn as much as I can

  11. Gautam says:

    Sir, I have a huge respect for you, you are the most kind n intellectual person I have ever seen :)

  12. idopise says:

    thanks so much for lecture,am grateful,
    how can one spot the direction of the third candlestick since it will always form after the pin bar?

  13. Giridhar says:

    what should be the size of the wick of a candle compared to the body of a candle to consider it as a good pin bar.

    (Wick:Body)

  14. celeste choy says:

    OMGost!!! i love you so much! the greatest information i had ever found in the wide web world! excellent perfect job u had did :) easy to understand even for a novice like me!

  15. Marlon says:

    Excellent

  16. Daniel says:

    WOW! Today is my FIRST DAY as a member; as I read & study Price action w/ the pin bars and Confluence, I am identifying Pin Bars in the AUDUSD 240min live chart. What an amazing technique. Thank you.

  17. ERIKA says:

    Thank you very simple explanation.

  18. Forensa says:

    What broker do you use? As a 24 hour market it is not easy to get proper bar/candles on Forex. Is there a broker whose platform shows candles begining at Asian session and closing at the close of US session?
    Thanks, Nial.

  19. Okoyeocha says:

    sure!
    this is one of the best lesson i have received as a trader

  20. Ivan Sonavia says:

    Wow! So simple and clear explanation about the pin bar formation.

    I can tell that this is one of the best article you can find about the price action trading strategy.

    love it!

  21. dev nandan says:

    this artical is realy good and gain full for knowledge

  22. userkami says:

    A very good article for newbies like me.
    Lot of thanx.

  23. jewel says:

    well written , i manage to get some info about pin bar formation, thanks for this article

  24. Haroun Kola says:

    Awesome article. I love how easy you’re making all these lessons. I had a hard time when I was first interested in forex trading, enough to run away from ever trading. But now, I’m thinking of at least opening up a demo account and testing out these skills!

  25. lloyd Mabheka says:

    thanks a million for the knowledge.keep the good work up.

  26. oykunle says:

    well lve never come across any vivid explanatory seminar or webinar like dis even d one i pay for therefore i will give it a trial to know if d method is still effective if so u will ever be my Mentor and my Guru thanks for d shared kwnollege. looking forward to ur e mail

  27. ad says:

    very very very good tutorial about pinochhio bar in detail with examples.u r doing a noble work,keep it cotinue……thanx

  28. waterman says:

    Excellent article. In a flash back of my mind I clearly remember the number of pinbars formed just in front of me but I missed them by staring at them ‘cos I could not read them.

  29. Olorungbemi says:

    Am happy to come across this post am now becoming expert thanks

  30. kamal says:

    this is very useful , thank you

  31. deji says:

    hi Nial,you are doing an amazing job with this blog-site…your grasp of price action is unparalleled……see you soon …..cheers

  32. sabuhi says:

    Thanks Nial for this strategy

  33. YY says:

    Thanks a lot Nial, you are definitively become my Mentor :-)

  34. william says:

    Thanks for so powerfull teaching whit pin s bars .I want to know where i can read your answerd to all the questionr you receive? william.

  35. olasege says:

    wow……. nail.
    you are the man, how much do i give in return for this tutorial that has made me millioniar.
    once again thanks a million times.

  36. Kend F says:

    Nial

    Thanks for all your tips. Your professionalism and knowledge will serve the trading community well. With all the comments I’ve read your mentoring is most appreciated! I look forward to your e-mails…

  37. Larry H. says:

    Nial,

    Thanks to you and your fine course it’s (Price-Action)working! Trading nickels and dimes on my micro acct and now up over $90 cum profit.

    This ol (72 yrs)ex-18 wheeler is becoming one proud and appreciative trader. Thanks again! Larry

  38. David says:

    Great!! In fact, they are littered everywhere on the chart platforms. And that’s a nice and profitable discovery, thanks. Keep ‘em coming.

  39. gboyega says:

    nial,

    though am still a newbie in forex and those around me have told me not to look for any indicator setup but instead learn to trade using price action and i can say that your site is still the one that i know that has done justice to that. your articles have really helped me to fine tune myself. cant wait to become your full member though this will take sone time as am still trying to put the money together.
    thanks for the free info again on your site that people rarely finds out there

  40. Sebastian Norman says:

    Thank you very much Nial Fuller. I am new in forex trading. I will make full use of this course and tips given by you.

    Thanks again.
    Sebastian

  41. Ismail Abdul-Aziz says:

    Thank you very much Nial Fuller,
    Question please…,

    Rregarding the setup or the entry point, you told us to entr the trade as soon as we break or exceede the HIGH price or the LOW price of the Pin Bar….we will sell on a break of the low of the pin bar or buy on a break of the high of the pin bar.

    We see the third bar already breaks that point above or below, but it is still on the way to be formed, not completed yet….

    Shall we pull the trigger as soon as it ocurrs -I mean BREAK- or wait till the third bar is actually formed?

    Kindly feed me back if possible…!
    Thank again

    Ismail Abdul-Aziz, Egypt

  42. Larry H. says:

    Nial,

    This new member recently emailed you for guidance (structure) on how to best use the provided course materials. Your email response was fast, detailed and specific. You (100%)delivered. Wish more businesses were like this!!!!

    Thanks again – Larry

  43. gary says:

    thanks a $illion nail. may god continue to bless u

  44. Guanmounho says:

    Thank you so much. Many time, I wonder about pin bar. I don’t know about it well. How to trade with pin bar set up,so far I know about pin bar . I appreciate for that.

  45. Marinus says:

    an eye opener for someone who always tried to use indicators

  46. Justin says:

    I tried this method and I made a nice little profit . Thanks Nial

  47. John Lavi says:

    Nial,
    Thanks for the article.
    Do you find the pin-bars on the hourly work as good on a 4 hourly and daily charts ?

  48. Ian Millar says:

    Many thanks for this.

    Time to practice :-)

  49. paramasivan says:

    I am impressed with your knowledge of the forex market and your clear explanations of price action. I am a new trader that has decided to focus on the forex market. I promised myself not to waste anymore money on information and schools but I am close to making an exception for you. I realize that I must have a mentor that knows what he is doing. I have lost approx. 20% of my account in 6 months, going through the usual “hard knocks” every trader goes through. I usually learn things the hard way. I am determined to become a profitable trader. Recently, I took the “extreme ” step of taking myself out of the market and only trading on the simulator of my Trade Station account.

  50. joshua khumalo says:

    you are really the first person to make sence at all with a definate strategy man…….

    thank you very much SIR!!!!!!

    josh
    south africa

  51. Paul says:

    I just started trading the pinbar after reading about it on this site. Its true what the article above says; ‘you will wonder how you ever traded without it’ I cant believe how my view of price action has changed so fast since looking at the higher time frames and a few powerful price paterns.

  52. David says:

    I’ve always been wondering what a pin bar is. Finally now I have a clear picture of what it is and understand how to benefit from it. Thanks Nial!

  53. simon says:

    Thanks for the article in pin bar set. I begin to see more clearly the price action and begin to make more pips now. Thanks again

  54. cletus says:

    your simplistic and genuine approach to exposing this important technique in trading forex is quite commendable. the fact that you did not ask for money before giving this out goes a long way to highlight your sincerity in turning most of us traders who have been gambling for too long into profitable traders. you seem to have a lot of good stuffs embeded in you. i am going to be an ardent follower to you. thanks so much

  55. Melodie says:

    Price action rocks!! am a lot more confident about my trades and profitable! Thank you Nial;-)

  56. bk says:

    This is fantastic. Very easy to undersatand. Thank you

  57. eric granatha says:

    nice lessons,simple but great explanation with clearly examples.

  58. Umesh Banga says:

    best and simple explanation with good examples.

  59. Ade says:

    You’re God sent,i have toiling for months to learn what you gave us on platter of gold,more grease to your efforts.All your articles that i’ve read are true and sincere.

    Thanks

  60. galen says:

    The price range of the “pin bar” being within the price range of bar one and bar two or close has a strong bearing in my future observations “On the search for Pin Bars”.

  61. fairul says:

    hi,i’m new to this method but i find it so impressive,simple&easy to understand without using those “complicated” indicator,starting to like it,no…Love It!thanks bro!

  62. Mayowa says:

    Very nice and clear concept Nial….

  63. mohamed says:

    nice job bro
    i am going for your course

  64. Chris Spaulding says:

    I am impressed with your knowledge of the forex market and your clear explanations of price action. I am a new trader that has decided to focus on the forex market. I promised myself not to waste anymore money on information and schools but I am close to making an exception for you. I realize that I must have a mentor that knows what he is doing. I have lost approx. 20% of my account in 6 months, going through the usual “hard knocks” every trader goes through. I usually learn things the hard way. I am determined to become a profitable trader. Recently, I took the “extreme ” step of taking myself out of the market and only trading on the simulator of my Trade Station account.

  65. Dean says:

    Hi Nial,

    Im just heard this trading with price action ..wow! After reading this, i can’t believe its that simple..ill try it first in my trading and..wait the result next week, month…
    thank for the knowledges… 1 thumbs up!!!

  66. Vijay says:

    Hello Nial, though I am very newbie to forex I really understand your tutorial very well. It is clearly explained and it met all the points. Once again thanks for your tutorial.

  67. Carlos Pinon says:

    Hi Nial,

    Thanks for sharing, it’s a very clear and potential good strategy to look everytime.

    Have a nice day…
    Carlos

  68. Hastings says:

    Nial,

    Very clear explanation of the strategy. Thanks you for sharing this with us.

    God bless you

  69. T Allen says:

    Nial

    Very good layout and very well explained. You da MAN !!

    Thanks for these continued lessons that remind us that all we need is Price Action.

    Have a great day !!

  70. Chau Nguyen says:

    Hi Naial,

    Thank you for sharing this simple and effective pin bar technical analysis. I am so benefit from it.
    Thanks

    Chau.N

  71. Larry says:

    Thanks Nial,for going into detail on how the pin bar is to be traded.Now to apply it to my new way of trading for me that is. Trading the bigger time frames has put me at ease on trading. It has allowed me to have a plan finally.
    Thanks again Larry

  72. Henry says:

    Hi

    A well-written very clear article on this strategy. I will try and identify it when I next look at a price chart and see how it turns out. I’m not trading yet – still learning.

    Keep well
    Henry

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