(VIDEO) The Forex Pin Bar Trading Strategy Revealed | DPA

(VIDEO) The Forex Pin Bar Trading Strategy Revealed

The Forex pin bar trading strategy is by far my favorite price action pattern. In this lesson we’re going to cover what makes a pin bar a pin bar, how to know if a pin bar is worth trading as well as entry and exit strategies. As always, the term ‘bar’ is interchangeable with ‘candlestick’, however the common term has always been pin bar, not pin candlestick.

Video Transcription

The most common question I get when it comes to pin bars is how do I know when to trade one and how do I know when to stand aside. So in order to show this I’ve got a few examples set up. And the first pin bar I wanna take a look at is gonna be this bearish pin bar here. Now the first question you always wanna ask, whether it’s a pin bar or an inside bar or any strategy for that matter, is why am I trading this? What odds are in my favor? Because we all know that stacking the odds in your favor is really what it’s all about. That’s what makes you consistent.

So let me ask you, would you trade this pin bar? And you should be answering with well, I don’t know. I’d have to see what happened previously to know the answer to that. So let’s do that. If we zoom out here on the daily chart we can see that we’re clearly in an uptrend. We’re making higher highs followed by higher lows. So this bearish pin bar here I can already tell you would be no good because I don’t wanna get short in a market where we have this kind of upward momentum.

So if we move on to the next pin bar we come to this bullish pin bar here. And unlike the last one, this one is obviously with the trend. We also have our two moving averages that are providing dynamic support. The pin bar tail is also nice and long so that’s also good. But there’s one other factor here that really gives credence to why this is a good setup, and again we have to look back and previous price action. So if we draw our horizontal line we can see that this level acted as resistance previously. We then broke through this level on this bar, retested that level as support which held and price was rejected off of it forming a pin bar. This is exactly what we wanna look for.

So resistance broke through, rejected, forming a pin bar. We’re with the trend. We have our moving averages. It’s a well-formed pin bar so this would be a valid trade setup.

Now there’s two other pin bars on here that are even better trade setups and I’ll show you why. But first let’s identify those pin bars and those two are right here. Now these pin bars also, just like the last one, also have the momentum in their favor. We have the two moving averages. They’re also well-formed pin bars with nice long tails. But there’s one other factor here that really makes these two pin bars a great setup and that is this key level. And the reason I like this level better than the last one is simply because we have three touches.

So we touched this level three times. We broke through it on this bar. We then immediately formed a pin bar and this is exactly what we wanna look for. So let me just compare these two pin bars with the last one to drive this point home.

So the last one we had one touch off of this level, we broke through it and then formed the pin bar. So we had one touch on this level. Over here we had three touches, we broke through and then formed a pin bar. So any time you have three touches it’s gonna be a stronger level than just one touch. So although this was a valid trade setup you can see the price did retest this level once again before breaking through whereas up here as soon as we broke through this three touch level we took off for about 300 pips.


Before getting into the actual Forex pin bar trading strategy, we need to know the parts that make up a pin bar so we can easily identify them.

What is a Pin Bar?

forex pin bar candlesticks

Let’s start with the “tail” of the pin bar, which is its defining characteristic and also sometimes called the “wick” or “shadow”. The tail of a pin bar should be at least 2/3 the length of the entire bar. The longer the better, but it must make up at least 2/3 of the bar from end to end. Notice in the image to the right, the tail is about 3/4 of the entire bar, so this qualifies.

The “body” of a pin bar is also important as it represents the open and close of the pin bar. The open and close should be close together; the closer the better. The body should also be close to the end of the pin bar. Notice how close the open and close are to the nose of the pin bar in the image.

Last but not least, the “nose” of the pin bar. While not as important as the tail or body, the nose is important only as it relates to the tail and body. This is because if the tail is at least 2/3 of the entire bar and the body is small, then the nose should also be relatively small. Also know that a pin bar doesn’t need a nose to be a pin bar. Sometimes it’s non-existent if the open or close occur at the extreme end of the pin bar.

Here’s a short video explanation of the characteristics of a pin bar. I also go into details about what makes this candlestick pattern such an effective price action strategy. Enjoy!

http://dailypriceaction.wistia.com/medias/ow468udvnd?embedType=async&videoFoam=true&videoWidth=640

The Three Types of Pin Bars

There are two main types of pin bars as it relates to price action patterns that are taught in my price action course. Most traders assume the pin bar is simply a reversal pattern, and it is, but there’s another way to trade pin bars that I’ll explain shortly. First, let’s look at the more common way to trade pin bars as a reversal pattern.

pin bar reversal pattern

The reversal pin bar (above) is best played in a ranging market or on a pullback within a larger trend. Let’s look at both in action.

Below is a great example of a pin bar that formed after price broke through support and then retested it from the other side as resistance. This is actually a pattern that’s still taking shape as I type this.

pullback pin bar at resistance

Now for the other type of reversal pin bar, which can be found in a ranging market.

pin bars in ranging market

So far we’ve seen pin bars that form on pullbacks as part of a larger trend as well as pin bars that form in ranging markets. Now let’s look at the less common way to trade the pin bar, as a continuation pattern. The differentiating factor here is that a pin bar continuation pattern doesn’t have a pullback (or very little) relative to the examples above.

pin bar continuation pattern

The key to this pattern is that the pin bar must form in the direction of a trending market. Notice the pin bar just in front of the pin bar that I’ve identified in the chart above, the one that’s facing the other direction. It too is technically a pin bar, however it’s going against the trend, so it would not make for a good trade. Here’s a zoomed out chart of the same setup to see what I mean…

forex pin bar patterns on daily chart

I wanted to put this chart up for three reasons.

  1. To show that our pin bar would have given us a nice gain because it’s well-formed and in the direction of a strong trend
  2. The first pin bar that formed in the chart above was against the trend, so it would have been a “no trade” for us
  3. The reversal pin bar I pointed out in the chart above is technically perfect, however it too would have been a “no trade” for us. If you said because it too is against the trend, you’d be right! But there’s another reason why we wouldn’t have trade that reversal pin bar. Any ideas?…Okay, I give in, here you go 🙂

Pin Bars and Confluence

Confluence simply means, the coming together of two or more “things”. For Forex traders, confluence means the coming together of, or combination of, two or more price action patterns, levels or indicators. Let’s look at the setup below, which is the exact same setup we looked at before, only this time we’ll start identifying our “factors” of confluence.

pin bar at key level

Let me clarify what’s happening here by identifying the various factors at work. To make this as applicable as possible, I’ll go through each factor as if I were doing my own analysis.

  1. Well-formed pin bar rejecting previous resistance level, now acting as support
  2. Trend is clearly up
  3. The pin bar is rejecting the 8 day EMA, which is intersecting the horizontal support level
  4. No immediate resistance above the pin bar (it has room to run)

So there you have it, a simple pre-trade analysis using confluence factors. It’s really that simple 🙂

I should point out that #4 above isn’t technically considered a confluence factor, but clearly identifying support and resistance levels is an extremely important part of any pre-trade analysis.

You’re probably wondering what the two moving averages are all about. Well, I use the 10 and 20 period EMAs in my trading. I find that they help to quickly identify the trend and also act as dynamic support and resistanceAs a side note, you might find that I don’t use them on all the charts posted on this site, but that’s only because I don’t want to unnecessarily clutter the price action patterns.

You are probably on to it by now, but I want to point out why that reversal pin at the top of the GBPCAD chart above doesn’t fit our criteria. So here it is…

pin bar against the trend

In other words, we didn’t have the necessary confluence to consider this a worthy pin bar to trade. The pin bar above has everything going against it except that it is a well-formed pin bar. The two most important reasons why I wouldn’t trade the reversal pin bar above are:

  1. It’s against the major trend
  2. There’s no resistance level to give me reason to believe that it is indeed a reversal point in the market

That about wraps up confluence. Think of these confluence factors as your pre-trade checklist, similar to a pilot’s pre-flight checklist, only ours is a LOT shorter…at least I hope.

Entry and Exit Strategies

Because there are a few different ways to get in and out of pin bars, and because this lesson is already pretty long, I decided to include pin bar entry and exit strategies in a separate lesson. But in order to get access to the link, you must answer the question below…okay, I’m only kidding, but I would appreciate it if you would take the time to comment below as I’m always interested to see what other traders are doing when it comes to pin bars. Thanks in advance!

Your Turn

Are you currently trading pin bars? If so, how do you trade them? If not, do you see yourself including them in the future? I look forward to seeing your comment below!

  • Rico says:

    Hi, I’m 18 and I just started trading forex and I love it. I find you articles and lessons vey helpfull! Thank you for the hard work.

    • You’re welcome, Rico. I’m glad to hear that. Let me know if you need help with anything along the way.

  • otubanjo adewale says:

    This is simply awesome and it has open up opportunity for me to trade PIN BAR.
    Thank you sir

  • Jordan says:

    Hi Justin.
    One thing about the 3 types of Pin bar examples you provide confuses me.

    I understand the Pin bar reversal in a ranging market

    However, the example for the REVERSAL pin bar as part of a larger trend (Its the second picture after the title “3 types of pins bars”) appears to look like the pin bar CONTINUES the trend (Instead of reversing it like you mentioned).
    Could you please elaborate on what you meant here?

    Im also unsure about the pin bar as a continuation pattern with no (or very little) pullback, as the pin bar here does appear to pull back and reject the previous resistance.
    The picture i am looking at is the 4th picture from the title “3 types of pin bars”.

    Sorry for all the questions.
    Just found it quite ambiguous.

    If you could help clear that up, thatd be great.

    Kind regards,

    Jordan.

  • Jordan says:

    Actually, never mind about the continuation pattern, i understand that now 🙂

    But i still am unsure about the “Reversal Pin bar as part of a larger trend” as your 2nd picture after the title “3 types of pin bars” appears to show the trend continuing instead of reversing.

    I hope these make sense!
    Please let me know if ive confused the crap out of you and ill try to explain differently.

    Thanks 🙂

    Jordan

    • Jordan, I’m not entirely sure what you’re referring to, but I will be updating all of these older lessons over the next couple months. Hopefully that’ll clear up any confusion.

  • Tajuddin says:

    heyyy sir! awesome articles… huge fan of yours already. though a little tough making decisions, but its really fun trading after i went through your words. God bless you. please email me if possible so i can contact you straight away.. thanks a million

    • Tajuddin, glad to hear you enjoyed the lesson. Feel free to reach out with any questions.

  • Al Bennett says:

    I am very interested in Pin Bar Trading. I have tried other methods on trading FOREX but was unsuccessful with all.

    • Al, pin bars are where I got my start with price action. And although I’ve incorporated other strategies since then, it’s by far one of the most telling candlestick formations out there.

  • Stephen says:

    I must say,you are a very good teacher. I’m actually new to the trading world and have been trying and trying but my techniques wasn’t resulting in any productivity. I’m absolutely thrilled to start using pin bars and can’t wait to see what they will yield for me?
    I hope I will come back to testify !!

    • Stephen, that’s great to hear, thanks for sharing. Be sure to browse the rest of the site as pin bars are just a fraction of what we trade.

      Let me know if you have any questions. Cheers.

  • Duong Nguyen says:

    You are really excellent. I am Vietnamese. Maybe, I do not fully understand the meaning you want to convey. but I will try harder. thank you very much

    • Duong, you’re most welcome. Feel free to send me an email if you have questions. My door is always open.

  • Jake Smith says:

    Great work.
    According to me the trick that is working now may not work in a year. So you have to be constantly learning new things to become a successful trader.

    • Jake, thanks for commenting but I have to disagree entirely. Price action has been around for hundreds of years. As long as humans play a role, it’ll work.

  • sikelela says:

    I have just started using trend after reading your lesson, they are very interesting and have logic look forward to your emails

  • Feisal Rahimtoola says:

    Very lucid (simplified, non clutter) description of how to use pin bar in trading. Never saw such a beautiful piece in thirty years.

  • Wan yahya says:

    I want to be like you….thank..

  • Verry useful lesson.Please keep doing it.Thank you!!!

  • Charles says:

    Hi Jason, not directly relating to the above: I am a member and have been over your course and read many other DPA posts. I haven’t found any comment much less any clear recommendation for moving stops once a trade is under way. Can you please comment or direct me to a piece that might address this question.

    Regards,

    Charles.

  • Mary says:

    Hi Jason,

    I am thrilled with your lessons, I have been following and reading all. Though it is very hard to leave your old habits. I started trading using lower time frames M15 and I have the habit of going back to verify. After reading about the pin bars, I placed a trade on demo on GBPCHF on the 29th of August when the bullish pin bar was formed. Currently it has moved 725 pips. My question is, where do you place your take profit. Should I wait for a reversal pin bar to foam or it is guess work.

    • Robin says:

      I would like to know did you see that pinbar also on the daily on aug 29 you can easily see this?

  • Joshua says:

    Hi Justin, your lesson is great and so helpful. Though just new in the market, I think by your teachings, I have a great potential. Please, keep updating me. Thanks

  • Faith pasi says:

    You are brilliant , you explain clearly. Thank you

  • […] me this topic includes the pin bar trading strategy as well as the inside bar trading strategy. It’s important to outline each strategy you will use […]

  • Tawanda says:

    I’ve currently been practicing price action and now want to learn more about swing trading. This was a really helpful article and I’m reading a bunch more after this

  • Jesse Abah says:

    Pin bars and on a smaller time frame and on a bigger time frame which of the above is more reliable ?

  • ABear says:

    enjoying the posts/lessons… just lurking about and trading on crypto currencies in small amounts just to get some familiarity. Figured your advice here should be applicable over there. But what do I really know. Just saying hi and thank you.

  • Ngozi says:

    Thank you for this lecture on pin bars.I will start putting it in practice

  • Yusuf Ahmad says:

    It’s now i begin to understand what is trading and how make good profit from it.
    Before it wasn’t interested in remaining in the business but now i begin to have interest in it.
    You begin to help me a lot,
    I lost a lot of money in forex
    I hope you’re help will continue until i get to the promised land.
    Thanks

  • Olly says:

    Hi Justin
    Thank you for your incredible knowledge. I am an amateur in forex trade. The lesson is really eye opener for me. I am looking forward to your next lesson on entry and exit pin point strategy. I am really struggling to identity the right place to enter and exit a position. I always realise, I enter late and exit late.

    My question is: at which point do I enter and exit a trade?

    Otherwise, I am gaining a lot because I am still going over the information to really understand better and trying to identify similar features on the live trade.

    Thumps up!!

  • manoj says:

    hi beautifully explained pin bars, however I would like to know, should the touches to the support & resistance should be a pin bar touches or any other type of candle will be ok to make it a stronger support/resistance

  • Tung says:

    Your lesson is helpful! Thanks!

  • Tshepo Kenneth Molepo says:

    hi J, and everybody. i must say as a novice trader it becomes difficult to formulate, let alone stick to a strategy, which subsequently could, if not often, lead to the typical “few Big Losers and Multiple Small Winners” syndrome.
    However since i started reading your posts i’m gradually gaining confidence in the my trades since i now have a strategy in place thanks to you.
    Your price action and candlestick tutorials are what i’ve been looking for….

    Thank you and God bless…

  • Okanlawon Olaitan Moruff says:

    Thank you for the lessons
    My question is what is the different between a Doji and Pin bar.
    Thank you.

  • Mjabulisi says:

    Hi Justin. I’m still a learner when it comes to trading but I find your tutorials quite informative. I have done some guesswork with binary trading before, but now I’m working on really understanding forex trading instead of thumbsucking. The reason that I started following your lessons is that I’m even battling with a demo account because it’s not growing, which tells me that, there must be something that I’m doing wrong.

  • Henry says:

    Very interesting, I never knew that, I cannot wait to try trading the pin bars

  • Andria says:

    This content is such an amazing tool in my Forex toolkit. While trading Forex, at times I’ve inadvertently traded pin bars before but didn’t know it to be a strategy. Now I know why I do that and when not to do it. Thanks for all the great info you put out!

  • Ame+Orogun says:

    Excellent, Very educating/informative…I have always gravitated towards D1 Time Frame in collaboration with Pin Bars…these lessons on Pin Bars has now reinforced and confirmed my choice…there is now no looking back

    Thanks Bro

  • Hernando says:

    Good afternoon Justin, I have been trading with pin bars or at least I have been trying according to their explanations and they have been very productive, but I have had a problem in some occasions to identify if it is bearish or bullish since the color does not matter and this has been my difficulty, because when the trend is bullish and makes me a pin bar after a correction in some occasions this is black body and other white body and I confused this.
    But I wait with the practice and read and reread the explanation to overcome this confusion. See you and thank you.

  • Konrad says:

    Hello, how long pin bar signal on D1 is valid for you? I mean how many D1 candles (or other candles) couses this signal is not still valid.

  • heypaul says:

    Follow the people who make the money because they must have found a way to do that. If you want to find the gold you have to have a map to the Gold Mine. So buy the MAP

  • Cislin says:

    I am not currently trading pin bars (didn’t know how). Thanks for making the 5-part course so simple to understand. I’ve now made the decision to demo-trade this strategy for a while then whenever I’m comfortable that I understand and can trade profitably, I’ll trade live.
    Once again, thank you. You are an excellent teacher. The videos helped tremendously.

  • Chris says:

    Really good stuff. I’m hooked.You explain these things well. I don’t usually comment on things like this.

  • chimene says:

    Amazing read. looked insane at first glance but made a lot easier after your explanation. Thanks Justin.

  • Oladele says:

    I am just learning for the first time what pin bars are all about and considering what i have learned from this article, i intend to begin to trade use the pin bar strategy to trade. I’ll keep you posted

  • Affiong Richard says:

    I’m Affiong I am new in Forex I like this pin bar and I
    will use it in my trading thanks

  • Portia says:

    Hi . I am new to forex and i am still figuring out which strategy to use. I find your website very helpful.

  • PULAK NASKAR says:

    Your trading process is very help full to me .Please learn me with diagram .

  • Adam says:

    Thanks for the free lessons, much appreciated and helpful too!

  • Elesco says:

    I real get constructive information reading your articles thank you, but I need help on fibonnacci retracement use.

  • […] of the best pin bars form on the back of a major news event. In fact one of my favorite setups is the NFP pin bar. This […]

  • […] swing low was made we could have drawn our trend line. Notice how the market formed a bullish pin bar at the third touch from this trend line. This is a perfect example of the type of buying […]

  • Yinka says:

    This lesson is valuable to me. It shows me all the way have used the pin bar.

  • VITALIS says:

    Nice one. Am so adopting this pin bars. Thanks

  • During Umukoro says:

    Hi bro, I have not trade on pin bars but your clear analysis I am about to try my hands on it. I will give feedback later.

  • FESTUS says:

    Hi, I just started considering pin strategy. No grip on it yet but with this video and lecture note, it is worth practicing

  • tom says:

    this was so easy to understand. ive been studying for weeks and I finally had a breakthrough. thank you so much for your lesson

  • Obidinma Okeke says:

    Hello Justin, I have been studying your online coaching for a few days and found it interesting. My name is Obidi Okeke but you can call me Obi. I live in Lagos, Nigeria and a family man with a wife and 3 kids. I have practiced Forex trading with $100 following your online training guide and have made a profit of $80. I don’t want to presume I have perfected the art, but believe with you perfection is achievable. I would like to have a one-on-one with you. The reason been that I recently lost my job and will like to make Forex my main source of income. I have a savings of $5000 and will like to grow it to support my family in this hard times for us. I see an investment opportunity, with you by my side coaching me to be consistently profitable. My humble request will be if you can coaching me well to achieve this dream and I don’t mind paying a token in the early stages of this training.
    Help me to elevate my family to our dreams and aspiration. we will forever remain grateful.

    Humbly yours,
    Obi

  • Zal says:

    Hi Justin, i almost understand about your explaination only few that i didn’t get especially on the graph of Pin Bars and Confluence.. I am not sure how you draw the line because only few2 bars are peerfect Pin Bar and the rest are not.. I am just new in this forex.. Please explain more about it.. Thank you..

  • Sellvino Asiah says:

    I’m definitely starting to practice it on my micro account.

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