Taking a closer look at Pinbars Part 1

Pinbars are about the most popular word known to maybe every trader in the world. While the Pinbar refers to the Bar Chart, they have the same meaning for Candlesticks.

Pinbars are a very powerful setup, yet so strongly missunderstood. Pinbars are very good signals, yet not all Pinbars are worth to be traded. You can trade all Pinbars, but not all Pinbars are profitable. One of the reasons why Pinbars (Hammers and/or Shooting Star Candles) are strongly misunderstood is they are easy to spot. A Pinbar does not look like the average candle. The shape of the Pinbar gives it a special meaning. It’s just like the colour red. Among all other colours, red is the one colour that catches attention immediately. But it is still a colour.

Now, since we are able to spot Pinbars so easily, our minds give Pinbars a stronger meaning. But Pinbars are just random candles, just like any other candles and candle formations. You can trade every pinbar successfully, but not all Pinbars are going to be profitable.

Let me highlight this with the charts below.

and

As you can see, not all Pinbars are profitable to trade. Yes, I have cherry picked the Pinbars. There are more that I could have picked that only went a small distance in the anticipated direction and resumed back the original path. 

Now don’t get me wrong. I like Pinbars a lot. Pinbars are about one of my most favourite signals. But I don’t trade every Pinbar. The most important point in trading is not the candlestick, but the location of the candlestick signal. If the location is not right, the Pinbar has no meaning. No meaning at all. It may still yield some profit. But that would not be attributed to the power of the Pinbar, but merely to the power of luck.

Now let me discuss why the Pinbar is such a powerful candlestick formation. It is seen easily on the chart. We want that. We do not want to be the only person who sees the setup. And this is valid for all candlestick patterns. We want the whole world to see the candlestick setup. The logic is simple, right?

And the Pinbar is such a candlestick pattern that is very easily seen on the chart. Together with the right location and you can trade Pinbars only and you’ll be a profitable trader.

There is a lot more to talk about Pinbars. I will talk more about Pinbars in future articles.

If you have any questions, please leave them in the comments section below.

Happy trading,

TT