Forex trading is a lucrative industry, and traders use various strategies to maximize their profits. One such strategy is the inside pin bar forex trading strategy. In this article, we will explain what an inside pin bar forex is, how to identify it, and how to trade it.
What is an Inside Pin Bar Forex?
An inside pin bar forex is a candlestick pattern that combines two candlesticks – an inside bar and a pin bar. An inside bar forms when the high and low of a candlestick are within the range of the previous candlestick. A pin bar, on the other hand, is a candlestick with a small body and a long wick that extends in one direction. The wick represents a rejection of price at that level.
An inside pin bar forex occurs when the pin bar forms within the range of the previous candlestick. It is a powerful reversal pattern that signals a potential change in market direction.
How to Identify an Inside Pin Bar Forex
Identifying an inside pin bar forex is relatively easy. You need to look for a candlestick that has a small body with a long wick on one side and an inside bar on the other side. The wick should be at least two times the size of the body. The inside bar should be completely contained within the range of the previous candlestick.
A bullish inside pin bar forex pattern forms when the pin bar is at the bottom of the candlestick, and a bearish inside pin bar forex pattern forms when the pin bar is at the top of the candlestick.
Trading an Inside Pin Bar Forex
Trading an inside pin bar forex is a bit tricky, and traders need to be cautious. The pattern signals a potential reversal, but it does not guarantee it. Therefore, traders need to look for additional confirmation before entering a trade.
Here are some tips on how to trade an inside pin bar forex:
1. Look for a strong trend
An inside pin bar forex pattern works best in a strong trend. Therefore, traders need to look for a market that is trending strongly in one direction. The trend will provide additional confirmation of the potential reversal.
2. Wait for confirmation
Traders should not rush into a trade when they spot an inside pin bar forex pattern. They should wait for additional confirmation before entering a trade. This confirmation could come from other technical indicators or price action.
3. Place a stop loss
Traders should always place a stop loss when trading an inside pin bar forex. The stop loss should be placed below the low of the pin bar for a bullish pattern and above the high of the pin bar for a bearish pattern.
4. Take profit
Traders should have a target profit in mind when trading an inside pin bar forex. The target profit should be at least two times the size of the stop loss.
Conclusion
An inside pin bar forex is a powerful reversal pattern that signals a potential change in market direction. Traders need to be cautious when trading this pattern and should look for additional confirmation before entering a trade. A strong trend, confirmation, stop loss, and target profit are essential when trading an inside pin bar forex.
