Pin Bar strategy is a very popular and simple strategy. And it is understandable to everyone, even a novice trader. This strategy doesn’t require comprehensive knowledge about the market, charts and technical analysis. In this strategy we do not need any indicator, but a little attention only.
The essence of the strategy is a specific candlestick pattern – Pin Bar (see picture). Some traders attribute this name to Pinocchio. That’s why sometimes this pattern called also Pinocchio Bar. This strategy is suitable for any asset and for different time frames.
The pattern consists of three candles. It should be expected close to top or bottom, depending on the trend. The second candle called as Pinocchio nose. And the longer nose means the stronger signal. It is showing that the price will go in reverse direction and trader should be prepared to buy an option.
Example of Pin Bar strategy for successful trading
The graph with upward trend produce candlestick with a long upper shadow. Buy the PUT option at the time when the next candle will be lower than the shadow of the Pin Bar candle. Expiry time depends on the time-frame, in the above example we use a five-minute chart (1 candle – 5 minutes), so it will be reasonable to buy an option with the expiry time of 3 candles (15 minutes).
Let’s look on the downtrend and candlestick with a long shadow looking down. Buy the CALL option at the time when the next candle will be higher than the shadow of the previous (Pin Bar) candle. And again expiry time depends on the time-frame. In the above example used five-minute chart (1 candle – 5 minutes), so it will be reasonable to buy an option with the expiry time of 3 candles (15 minutes).
There are more examples of Pin Bar pattern appearance on the real time chart for the pairs USD/JPY and USD/CAD
On the picture above (USD/CAD) there is a quite long higher shadow, and this is the right signal to buy and option at a time when the next candle will be lower than the shadow of the previous (Pin Bar) candle. Accordingly, choose the expiry time after 3-4 candles (45 minutes – 1 hour). Try to find the correct time of option purchase by yourself (according to our recommendations above).
The Pin Bar strategy for binary options is a simple method of trading in the financial market, this pattern appears pretty often and even a novice trader can use it. And as we can see its use does not require a lot of knowledge, but a careful adherence to simple rules only.
As usually we are recommending to try this strategy on the demo account before real trading. You may use IQ option demo account for these purposes: