Daily Pin Bar Low Risk Entry Method
Here’s how many traders would normally trade a daily pin bar:
- 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.
But I believe this is not the best way of trading the pin bar and I will list the reasons why here:
- if you know, the daily pin bars are unusually long candlesticks
- which creates a problem because it means your stop loss would be huge
- which means at the place where you enter a trade may not necessarily be a good one.
So is there a better option? A low Risk Entry Method?
You bet there is! In here, I will show you a better way to trade the daily Pin Bar.
Here’s the Daily Pin Bar Low Risk Entry Method:
- 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 method, 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 of Trading The Daily Pin Bar With The Low Risk Entry Method:
- 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.
Any Disadvantages of this Forex Trading System?
- Not all daily pin bars may have strong breakouts when their highs are broken.
- Pin bars can form anywhere but not 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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$SPY has now had an orderly six days straight of lower highs and lower lows. This is what a down swing looks like. Volume has been increasing during this swing lower in prices. Price closed under the 10 day EMA the last two trading days breaking the short term uptrend. The Overbought 70 RSI held as short term resistance on the up trend. The gap up in price from August 27th has been filled last week. The trading range continues to be tight with a 1.93 ATR that has not expanded yet. The $VIX closed above its 200 day moving average last week and the trend in the $VIX is up with higher highs and higher lows in price last week showing an expansion in fear of increasing volatility. The MACD had a bearish cross under last week. $SPY remains near all time highs in price. The next major support level is the 50 day SMA.
I am an aspiring binary options trader but what has eluded me is a trading system that prevents me over trading and yet provides accurate signals. So having landed on this system i have decided to share it. It requires patience when trading on 5 min t-f but signals are some what regular on 1min t-f which requires filtering. So enjoy but follow the instructions in the folder.