trade with price action
mo858:
The price acton set up
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The price acton set up
The pin bar trade setup is the most effective price action trade setup there is. It is an extremely powerful setup when used correctly. Many trader only trade off of a pin bar formation and they are very successful traders. In this lesson you will learn what a pin bar is, the characteristics of one, how to trade it and the difference between a great pin bar and an average one.
What is a Pin Bar?
A pin bar is short for Pinocchio bar, the reason it is called a Pinocchio bar is because it is telling us that the market is lying. What that means is that the market price went to a certain level then came all the way back to near the opening price. It lied as to where the price was going.
The best time to enter a pin bar trade is when you have the trend in your favor and it has formed right on a support or resistance zone. This is called trading with confluence.
Trading with confluence is the most important thing when it comes to having highly successful trades. It means that you have at least two things in your favor. We can use in trading because we can often have more than two reasons to enter a trade. Those reasons could be with trend, at support or resistance zone or a trade setup.
When you are able to get all three of those things in your favor you can expect a much higher win percentage on your trades.
This is a great example of a trade that has everything working for it. A bullish pin bar has formed at a support and resistance zone and the market is in a uptrend. All three are working in your favor which makes for a very high probability trade setup.
Entry and Stop Loss Placement
The entry point and the stop-loss placement are very important to figure out before you make any trade. This way you know your risk that you are taking and know where your trade will be entered.
The entry point is very simple to find for a pin bar setup because you place it right below the low of a bearish pin bar and right above a bullish one. The best way to do this is setup a sell or buy stop order. What that means is that once the price gets to a certain level your trade will be triggered and you will be in the trade. This provides the most accuracy when trading.
Simple diagram of where to place your sell and buy stop orders for a pin bar trade.
The stop-loss is also very simple to find for a pin bar trade. You place the stop-loss right above or below the wick of the candle. Placing the stop-loss here will give the trade space to work itself out and hopefully move in the direction you had hoped.
Another really easy to follow diagram of where to place your stop losses when trading a pin bar.