There are a few ways to trade the daily pin bar, but this Daily Pin Bar Forex Strategy which you are going to learn uses a simple trading technique to ensure you get into a trade with a low risk and also short stop loss distance.
Timeframes: You need the daily and 4hr or the daily and 1hr.
Currency Pairs: Any
Forex Indicators: None
Anything Else?: Have a bit of muti-timeframe trading skills. Don’t worry, its explained below.
This is how many forex traders would trade the daily pin bar:[sociallocker]
- as soon as the high of the daily pin bar is broken, a buy order is initiated
- and stop loss is placed below the low of the pin bar.
In my opinion, this is not the best way of trading the daily pin bar and here’s why:
- if you know, the daily pin bars are unusually long candlesticks which means your stop loss distance would be huge, anywhere from 100-150 pips or more on some currency pairs.
- which means at the place where you enter a trade may not necessarily be a good one and may take a longer time before your trade gets into profit.
SO IS THERE A LOW RISK ENTRY TECHNIQUE OR METHOD?
There is! And in here, I will show you a better way to trade the daily Pin Bar and avoid those huge stop loss distance of the daily pin bar.
DAILY PIN BAR FOREX TRADING STRATEGY RULES
Refer to this chart and the rules are written below:
- After the daily candlestick has formed, you need to identify it to see whether its a pin bar or not.
- Once you’ve identified that it is a pin bar, you then need to switch to either the 4hr or 1 hr timeframe (which ever you prefer).
- Once you are in the smaller timeframes like the 1hr or the 4hr, you have to watch and wait for price to go down.
- The buy entry candlestick is the candlestick that takes out the high of the previous candlestick. This is your signal to place a buy stop order above the high of that candlestick and place your stop loss a few pips below the low of that candlestick.
- If you get stopped out, keep looking for the next buy entry candlestick. It is preferable that the buy entry candlestick be happening within the high and low range of the pin bar.
With this trading technique, you will have a low risk entry in anticipation of a breakout of the high of the daily pin bar. So you want to get into a low risk entry trade before the breakout happens.
ADVANTAGES OF THE DAILY PIN BAR FOREX TRADING STRATEGY
- Switching to 1hr or 4hr timeframes to look for the buy entry candlestick allows you to enter early before a breakout happens when the daily pin bar high is broken to the upside.
- Which also means low risk entry, instead of a 100 pips stop loss on the daily timeframe pin bar, you could be entering a trade with 25 pips stop loss using 1hr or 4hr timeframes as shown by the charts.
- if a valid and nice breakout happens, you make a lot of profitable pips easily.
- know also that when a pin bar forms in the daily timeframe, it gets the attention of many breakout traders who would be stacking their buy orders just above the high of pin bar in anticipation of a breakout so once price hits these orders, the markets tends to shoot upwards quickly.
- Daily Pin Bars forming around strong areas of Support worth paying attention to because as mentioned above, many traders would be watching it.
DISADVANTAGES OF THE DAILY PIN BAR FOREX TRADING STRATEGY
- Not all daily pin bars may have strong breakouts when their highs are broken.
- Pin bars can form anywhere but no all of them would be good to trade. Pin bars forming on support levels or major fib levels and pivot points are the ones you should be focused on trading.
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hello sir,where do you take your profit?