I continue to give material on price action. Today there will be a conversation about pin bar.
A lot of material is given on examples of forex, but the very principle of trading these models is very successfully applied in stock trading.
Pin bar – basics
This is how it looks on the graph.:
Long nose (in this case the long upper shadow) pin bar indicates that the bulls were trying to push the price higher, but the bears had the strength not only to stop the movement, but also to seize the initiative and start pressure down. This is a good and strong sign of a reversal.. It is necessary to trade in the opposite direction, которое указывает “нос” (in this case on the side of the bears).
The top of the adjacent bars are “through the eyes” pin-bar. Also a necessary rule – the closing and opening of the pin bar must be within “left eye”.
In the example 1 the opening and closing of the pin bar below “left eye” – this is the correct pin bar. If the close were higher “left eye”, then the model is considered incorrect.
What should a good pin bar have??
- open / close within the left eye
- jut out of surrounding bars
- длинный “нос”, protruding far beyond the surrounding bars
- open / close near one end of the bar
Best to trade pin bars , when they push off:
- уровней поддержки/сопротивления
- уровней Фибоначчи
- important Pivot levels
- moving averages
- merging of different levels
- swing tops or bottoms
- rollback of the current movement
Пин-бар – very reliable signal, if arises at strong levels. И для того, so that your deals are almost always successful, need to trade “самые лучшие” pin bars.
Example 2 – Daily chart:
Example 3 – Weekly chart:
In the example 2 показан дневной schedule CAT. Пин бар появился ан уровне коррекции 38,2%, gives a signal to continue the main trend. It is also a strong support area for the stock. 55-56$ , which she could not break through at the end of October. This is a good example of a pin bar..
In the example 3 weekly CAT chart shown. The pin bar formed at the level 60$, which was support in the beginning 2008 years and after the breakdown in October 2008 the year became a resistance level, which the stock не могла пробить несколько недель в конце 2009 of the year. And also this is the level 61,8% CAT movement corrections since April 2008 to April 2009 of the year. This is also an example of a good p-bar..
How to trade a pin bar?
Tem, кто не имеет опыта торговли с пин-бром необходимо располагать стоп ордер выше/ниже основания пина. Breakdown will be confirmation, that the trend is developing towards, opposite to the nose.
You may never know on 100% whether the trade will be profitable or unprofitable, therefore, it is always necessary to place a protective stop loss order after opening a trade. Также необходимо рассчитывать уровень “денежного” риска и выбирать соответствующий размер сделки.
Exit a position
Entrance – That's not all! Much more important – exit from position. Есть несколько рекомендаций по поводу выхода из сделок на пин-барах:
- Very few good pin bars (swing high / low or merge) will move the price in the direction of the initial conservative stop loss, without that, to give the trader a chance to take at least some profit (according to statistics no more 10%, or even less).
- Trader должен брать тот профит, which gives the market.
- The trader SHOULD NOT let the winner become the loser
- Yes, really pin bar – this is a very good and reliable signal
- The market abounds in pin bar trading offers, be careful and choose only perfect setups!
It is very important to always lock in part of the profit and quickly pull up the stop to breakeven for the rest of the position..
You can never guess how long the movement will be after entering., so fix the position in parts. For example, after the first movement, you fix half, потом еще 1/3 or 1/4, but you always need to leave at least a small part to the end.
Also, always protect the profits already made., pulling up the stop.
Trade – it's a constant risk, and even “идеальные” trading models and setups cannot guarantee profits, so always protect yourself from losses. Choose only the best moments to enter. Try to trade with the trend.
And wait for the continuation…
okbm(“http://nysetrader.net/pin-bar/”,”Pin bar”)
