There are a few types of candles. Pin bars are one of them. This kind of Japanese candles is distinguished by its shape. Today I will show you the way to recognize pin bars and trade using them on the Binomo platform.
Pin bar candles specification
Pin bar candles can be easily identified by a very small body and a long shadow on one side. This shadow is usually about two-thirds of the whole candle. On the other side of the body, there is a very short wick or no wick at all.
Pin bars are candles that are useful in trending markets. They appear along with the trend and provide information about trend reversal.
There are two kinds of pin bars. Bullish and bearish ones.
Bullish pin bar candles
Bullish pin bars have a long wick pointed downwards. They develop at the exhaustion point of a downtrend when sellers lower the price and buyers jump in to lift the price up. This is a signal of a trend reversal, the uptrend is imminent and that is why you should go long.
Bearish pin bar candles
The bearish pin bars’ long wick is directed upwards. They appear during an uptrend when the trend is about to finish. Buyers try to keep the price up, but the sellers jump in and lower the price significantly. This gives the beginning of the downtrend and thus, you ought to open a short trade.
2 approaches to trading with pin bars on the Binomo platform
Whenever you plan on using pin bars for trading, you must check that the following requirements are fulfilled. One is that the candle develops completely. The second is that the market is trending.
How to trade with pin bars in trending markets
You have already learned that the pin bars that form in the trending markets forecast a change in the trend. That is why you should enter the position that is in opposition to the current trend. When a pin bar forms during a downtrend, you should wait until it is finished and open a buy trade. When a pin bar is observed during an uptrend and it is fully developed, you should enter a sell transaction.
With 1-minute candles, your position should last around 5 minutes. When you are trading with the 5-minute candles chart, you can open a transaction for about 30 minutes.
How to trade pin bars according to their color
Both bearish and bullish pin bars may be of a green or red color. You do not identify pin bars by the color, but by the direction of the long wick. Still, you can use them in trading based on colors.
It is highly probable that a green candle will appear after a bullish pin bar. Inversely, a red candle will develop after a bearish pin bar. Whenever you spot a green candle after a bullish pin bar you ought to go long. And when there is a red candle after a bearish pin bar you should open a short trade.
Pin bars are special candles that appear along with the trend and forecast its reversal. Remember, they work only in the trending markets and you must wait until they fully develop. Give it a try and head on to the Binomo demo account. Practice a while before you move to the live account. Share your thoughts on trading using pin bars and leave a comment in the section below.
Wish you success!