How to trade the market using the pin bar
The price action trading strategy is one of the most profitable ways to trade the Forex market. Many retail traders in Hong Kong are making a decent profit using the price action confirmation signal. Though there are many ways to trade the market by using the complex Japanese’s price action signal, we will make things easier. Those who are relatively new to trading might not know about the pin bar. In today’s article, we will give you a clear guideline to trading the pin bar with an extreme level of precision.
What is a pin bar?
A pin bar is a single Japanese candlestick which represents a strong reversal signal in the market. It has a long wick and small body. Some of you might not understand why this pin bar works in the trading industry. But if you understand the psychological reason behind the formation of the pin bar, things will become clear. The long wick or tail of the candlestick usually means the buyers or the sellers are losing control of the market. This clearly indicates a strong reversal signal. Let’s dig deep and learn how to trade this pin bar like a pro trader.
Trading the support
In order to execute long trades, you need a bullish pin bar. Before you start to trade the real market using the price action confirmation signal, make sure you visit https://www.home.saxo/en-hk to know the details of the premium trading environment. Since your trades are based on different candlestick pattern, it’s imperative you have precise price feed. Once you ensure a premium trading environment, it’s time to look for potential bullish pin bar right at the support level. Execute the trade with low-risk exposure when you find such setups.
Trading the bearish pin bar is just like trading the bullish pin bar. You need to find the key resistance point of the market and execute the trade. Make sure you are not taking a huge risk in any trade even though the system is extremely profitable.
Filtering the false trade setups
During the pin bar trading strategy, you will often lose money. Even after doing all the analysis perfectly you will lose some trades on a regular basis. So how do you deal with such problems? The idea is really simple. You need to learn multiple time frame analysis since it will help you to filter out the false trade setups. Never execute any trade using the pin bar in 1 hour or a lower time frame. The pro traders prefer to trade the pin bar in the 4-hour time frame since it allows them to make a decent profit without risking a large portion of their investment.
Dealing with market news
During the event of high impact news release, the market becomes extremely volatile. In such times, if you trade the market with the pinning strategy, you need to use a wide stop loss. At extreme market conditions, the spread will widen and this might result in heavy loss. Always remember, managing your risk factors is the most difficult task in the trading business. No matter how good you are trading, you will always have to lose some trades. But with proper risk management policy, you can easily make a profit in the long run. Most importantly, the recovery factor will be very easy.
Fine tune your trading strategy
Learning the pin bar trading strategy is not enough to ensure your profit factor in the trading business. You need to incorporate other important variables to filter out the best trades. At times you might be confused with your trading strategy but there is nothing wrong with it. Use the demo account offered by Saxo and test your trading strategy. Find the faults in your system and try to fix the issues. If required, seek help from trained traders and they will give you proper guidelines about this market. Think rationally to become a better trader.
