Pin Bar Forex Trading System III For MT4
The Pin Bar Forex Trading System III For MT4 is a price action trading strategy that helps traders to identify potential pin bar signals from the daily support and resistance areas of the price.
This system applies a pin bar indicator that detects pin bar candlestick patterns. Whenever the price-action forms a pin bar candle the indicator plots an arrow signal. Experienced professionals consider the pin bars as a powerful signal of trend-reversals. However, not every pin bar performs as a winning trade signal. So, you need to add other compatible trading indicators to filter the pin bar signals.
For this reason, this system includes the Daily Market Pivot indicator. The daily pivot represents the intraday support/resistance levels of the market. According to the strategy of this system, we’ll use the pin bar signals to buy at the support and sell from the resistance levels of the price.
Pin Bar Forex Trading System III for MT4 supports trading all kinds of forex currency pairs, stocks, futures, CFDs, Metals, Oils, and more within the financial markets. However, this pin bar trading strategy has been specially developed for trading in the 30-minute timeframe chart of the MT4 trading platform.
In this article, we’ve briefly discussed the indicators and trading rules of The Pin Bar Forex Trading System III For MT4. Besides, we’ve added some chart examples of pin bar trade setups including further explanations of its working methods.
Overview of The Pin Bar Forex Trading System III For MT4
- Pin Bar Indicator: This indicator automatically detects the pin bar candlestick patterns and plots signal arrows to highlight the pin bar candles.
The pin bar is a price candle with long tails and a short body. The tail of the pin bar represents the price rejection signal. We use this price rejection signal to forecast the next movement of the price following the pin bar pattern.
A bullish pin bar means the price is rejecting to move below a significant level and manages to close above the high of its previous candle. Oppositely, a bearish pin bar means the price is denying to move up and closes below the low of its prior candle.
According to the trade-entry rule of this strategy, we’ll activate a buy order when a bullish pin bar forms at the support level. Contrarily, a bearish pin bar plotted right below the resistance level is considered as a selling opportunity.
Furthermore, the pin bar signals also help traders to decide on breakout trade setups.
- Daily Market Pivots: The Daily Market Pivots works as the support and resistance indicator of this trading system.
Its pivot levels help traders in finding the ideal trade entry areas in the chart. According to this strategy, we’ll open a buy order when a bullish pin bar appears at the pivot support level. Oppositely, we’ll confirm a sell order once a bearish pin bar is plotted at the pivot resistance area.
Besides, its support and resistance levels also represent potential breakout levels of the price. We determine the breakout direction depending on whether the price breaks the support or resistance levels of the market.
Go for a long entry when the price breaks above the pivot resistance and plots a bullish pin bar at the same time. Contrarily, confirm a short entry once the price breaks below the pivot support and plots a bearish pin bar candle.
Furthermore, you can use the daily market pivots for determining the stop-loss areas of the trade entries. For example, if you open a buy order near the daily pivot support area then place the stop-loss limit below the current support level.
The standard risk to reward target of this pin bar trading system is 1:2. This means you’re required to target at least a double profit compared to your budgeted loss for the trade. Also, you may bring the stop-loss limit to the breakeven when you’re on a 1:1 profit. This method limits your risk and at the same time lets, you aim for a 2R profit.
Chart Example of Buy Setups Using The Pin Bar Forex Trading System III For MT4
This is a 30-minute EURUSD chart showing a buy setup following a bullish pin bar at the daily pivot support area.
In the beginning, the EURUSD was moving in a downtrend following a bearish pin bar. At a point, the price rejected to move below the pivot support situated at the bottom of the chart. Instead, the price candle closes as a bullish pin bar with a long rejection tail originated from the support level. At the same time, the pin bar indicator plots an arrow below the price candle low to mention it as a valid pin bar.
Based on the above confirmation, we activate a buy order after the price breaks above the bullish pin bar high at 1.1808. Set the stop loss limit below the current pivot support at 1.1783 (25 pips).
According to this pin bar trading rule, we’re required to target at least a 2R profit. So, we exit the buy order at 1.1858 earning a 50 pips profit.
Chart Example of Sell Setups Using The Pin Bar Forex Trading System III For MT4
In this example, we’ve applied a 30-minute AUDUSD chart to show a sell setup based on a bearish pin bar plotted at the daily pivot resistance.
Initially, the AUDUSD was moving in a flat trend and was roaming in between the daily pivot support and resistance levels. After moving in a sideways direction for a while, the price candle forms a long-tailed bearish candle right below the daily pivot resistance. The pin bar indicator plots a red arrow above the price candle high confirming it as a bearish pin bar.
So, we activate a sell order after the price breaks the low of the bearish pin bar at 0.7182. We also place the stop loss limit above the current daily pivot resistance level at 0.7218 (36 pips).
As we can see, the price makes a huge downward-move and breaks several support-levels following the bearish pin bar signal. We exit this sell order at 0.7110 with a 72 pips (2R) profit.
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