The Pin Bar Strategies That Traders Must Know

The Forex market is intriguing for many who want to make money. First time traders especially
find it an interesting albeit confusing platform. Everyone who comes on board has one common
aim; to make money and hopefully lots of it. For a simple but effective strategy that has the
best risk-reward ratios, pin bar trading is recommended.

For Forex trading to make sense, every trader must aim to understand money matters with
regard to the risk-reward ratio. The ration should be a minimum 1:2 which basically means that
for every coin you risk, the reward should be twice that risk.

It takes time for the market to form patterns with most technical classic theories. Therefore,
coming across a simpler but fruitful trading strategy is exciting. You might be ready to open
your first fx trading account and start trading.

The Single-Candlestick Pattern

We have the Japanese to that for this one. Once this strategy was introduced to The West,
market participants were able to understand price action pretty fast. Previously, bar charts
were used. All these showed to good advantage were the opening and closing prices. There was
no follow through as seen with the candlesticks.

With the candlestick theory, traders look at the following details:

 The opening price

 The closing price
 The highest value
 The lowest value

The body of the candle is the difference between the opening and buying prices. It is also
known as the real body and look like a bull when the closing price is higher than the opening
price, and takes on the form of a bear when the opening price is lower. The tail is the price
action at the highest or lowest point.

The candlestick charts have been embraced as the preferred way of looking at a market among
Forex traders. The pin bar, which has been in use since the inception of technical analysis, have
become a single candle.

The Pin Bar

The pin bar forms when the real body is relatively small and the tail much longer. Traders will
tell you that the longer the tail, the better. Expert traders consider the length of the tail before
they hop onto the trading wagon.

Along the trading aisles, you will hear something such as the bullish pin bar having a green body
while the bearish one has a red body. This may not make much of a difference though. It is
better to follow the quotations of Forex brokers which are more likely to be accurate.

Trading the Pin Bar

The bullish pin must come with a bearish trend while the bearish one must have a bullish trend.
When the reversal shows a bullish trend, these are the steps that must be considered:

 The whole pin bar is measured from the highest point to the lowest.
 When the price breaks the lowest point, you are advised to go sort.
 You should place a stop loss order at the peak point if your pin bar is bearish.
 The length of the pin bar is projected to a minimum twice below the entry point.

There are times when the market reverses rather aggressively. This happens when a pin bar
trading strategy offers a risk-reward ratio is higher than 1:2. Traders have to act fast in order to
have a go at the new trend and will move the stop at break-even when the price goes to the 1:1
ratio.

What works in the favor of traders is their patience. They are aware that any reversal pattern is
caused by conflict. The battle is usually between the bulls and the bears and when this happens,
the reversal in the market does not happen easily. However, once a bullish trend occurs, bulls
fight on be beaten easily.

The truth about Forex trading is that one must get into it in order to learn. There are myriads of
strategies aside from the pin bar signal that any trader can learn as they gain experience in
Forex trading.