The pin bars are candlesticks that have a long wick or tail with a small body. There is an option on how to trade using this strategy that only involves a low risk and the methods are the following;
The daily candlestick must be formed first then you have to identify if that is a pin bar or not.
Switch to a 4-hour or 1-hour timeframe once you identify that it is a pin bar.
Wait for the 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.
Place the stop loss a few pips below the low of that candlestick.
It is advisable that the buy entry candlestick is happening within the high and low range of the pin bar.
Looking at the 1-hour or 4-hour time frames 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.
This also means that the entry is low risk, so instead of 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.
You can have good gains if a valid breakout happens.
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 tend to shoot upwards quickly.
Pay more attention to the Daily Pin Bars forming around strong support areas or when they form around the Fibonacci levels.
Daily Pin Bars don’t have a strong breakout always when they broke their highs.
Not all pin bars are a good trade, especially when they just form anywhere.
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