The pin bar price action pattern is a very powerful trading signal and one of my personal favourites. However, if you are simply trying to ‘learn it by yourself’, you are probably experiencing ‘mixed results’, to say the least. There are many subtleties to trading pin bars and my other price action signals that you must understand and master before you can really become a successful price action trader.
My trading style is all about waiting for the best price action trade signals to form. I absolutely do not jump at every pin bar or every price action signal that I see in the market. One of the things that I teach my students in my trading courses, is how to filter out the lower-probability trade setups so that you are only taking what I consider ‘high-probability’ price action trades.
Whilst this is a skill and also an art that takes further education and experience to really get good at, in today’s lesson I am going to share with you three of my favourite ‘tricks’ for filtering out sub-par pin bar signals so that you have an increased chance of improving your pin bar trading results…
1. Focus on pin bars in trends first
I am reluctant to tell you to ‘only’ take pin bars in trending markets, because there are times that pin bars in range-bound markets or even counter-trend pin bars, can be worth trading. But, as a general rule of thumb, such pins are few and far between and they are more difficult to trade then pin bars in obviously trending markets.
So, my first ‘trick’ for improving your pin bar trading results, is to focus only on pin bars in trending markets. This means, you will only look for trending markets or currency pairs, other (non-trending) charts you can just ignore for now. Focusing only on trending markets is especially important whilst you are learning how to trade pin bars. The first step to becoming a master pin bar trader, is learning to trade trending markets on the daily chart time frame and then the 4 hour chart time frame. However, make sure if you are trading the 4 hour chart, you take pin bars that are in-line with the daily chart trend direction. To learn more about how to trade trending markets, check out this tutorial on how to trade trending markets.
2. Next, focus on pin bars at key chart levels
Often, markets aren’t in an obvious trend like in the example we saw above. Whilst I do recommend focusing only on pin bars in trending markets in the beginning, eventually you will want and need to know how to trade pin bars in other market conditions because markets don’t always trend.
After you have mastered pin bars in trending markets, you can look for pin bars that simply form at key levels of support or resistance in the market. Key chart levels add a powerful factor of confluence to a pin bar setup and you can look at key chart levels for pin bars in trends, range-bound markets or even for counter-trend pin bars.
The ‘key’ with these types of pin bars (no pun intended), is to look for them at key chart levels. Now, if you aren’t clear on what a key chart level is, check out this link on key chart levels and this one on how to draw support and resistance levels, those lessons should clear it up for you.
Here’s another example of pin bars at key chart levels of support or resistance, this time it’s an example of a trading range where price is oscillating back and forth between key resistance and support levels…
3. Look for protrusion of the pin bar’s tail
Protrusion of the pin bar’s tail means that the tail is obviously sticking out or ‘protruding’ out from the surrounding price action or through a key chart level forming a false break strategy of the level.
The pin bar at its core, is a reversal signal, and the more the tail is protruding out from the surrounding price action or through a level, the stronger the rejection and reversal at that price point is. The stronger the reversal, the higher-probability the pin bar has of working out, generally speaking.
I will admit, the issue of ‘is a pin bar protruding or is it not’, is very much discretionary and can vary slightly depending on the individual. But, there are those pin bars that are so clearly protruding out from the surrounding price action or through a level that it’s nearly impossible to argue with them, these are the pin bars I look for.
Pin bars are one of the most effective price action trade signals, but trading them successfully isn’t as easy as just spotting a pin bar on the chart. There are subtle differences in a good pin bar vs. one you should avoid, and this article has introduced you to some of them. If you’d like to get a more in-depth explanation of how I trade pin bar signals and everything I look for when trading them, get my price action trading course for further training.