Pin Bars and Binary Options – strong strategy

In this article, we will consider Pin Bars and Binary Options – a strong strategy for trading on the BINOMO, IQOPTION, OLYMPTRADE trading platforms.

Pin bars are a very popular chart analysis model that is simple, versatile and profitable. The pin bar gives a strong entry signal and, at the same time, it is easy enough to recognize it on the chart. Working with this model requires a minimum of analysis and an appropriate minimum level of training. Almost any trading platform is suitable – the main thing is to be able to display the chart in the form of Japanese candlesticks or bars. In today’s article, you will learn how you can put into practice one of the most powerful technical signals in the field of Binary Options .

 

Strategy characteristics

Pin Bars and Binary Options - strong strategy

Platform: any
Currency pairs : any
Timeframe : from M15 and above
Option expiration : 3 candles
Trading time: around the clock
Recommended brokers: BINOMO, IQOPTION, OLYMPTRADE

Pin bar definition

Pin Bars and Binary Options - strong strategy

A pin bar is a candlestick with a very small or completely absent body in relation to its size. The pin bar has a long tail at one end, and a short one at the other (or no tail at all).

Pin Bars and Binary Options - strong strategy

Primarily, the pin bar is a reversal pattern, but it can also be used as a trend continuation pattern. The location of the candle body itself plays an important role.

For example, let’s take a bullish pattern with a body at the top of a candlestick. The closing price of the pin bar is almost equal to the opening price. From this, we conclude that the price fell for a long time after the opening, after which it turned in the opposite direction, going up the same distance. That is, buyers took upwards and it is assumed that the price will continue the already started trend.

The same thing happens with a bearish pin bar. Since the opening of the candlestick, the price has been growing, but at some point it reversed and went down the same distance. That is, the sellers won. The expected behavior is a continuation of the fall.

Trading strategy

Pin Bars and Binary Options - strong strategy

The simplest trading strategy based on pin bars is to buy an option towards the resulting hammer. Let me remind you that we are looking at the position of the candlestick body relative to its center, and not at the color. A signal to buy a Call option may well be triggered by a black pin bar and vice versa.

Pin Bars and Binary Options - strong strategy

Call Option Rules:

  • A bullish pin bar appeared on the chart;
  • The body of the pin bar must be within the previous candlestick;
  • We wait until the price crosses the high of the pin bar;
  • We enter a trade with an expiration date of 3 candles of the current TF.

Pin Bars and Binary Options - strong strategy

Rules for the Put option:

  • A bearish pin bar has formed on the chart;
  • The body of the pin bar must be within the previous candlestick;
  • We wait until the pin bar low is crossed;
  • We enter a trade with an expiration date of 3 candles of the current TF.

To protect yourself from some false entries, always try to enter in the direction of the main trend movement , for example, on a correction. In the event that there is no obvious trend, it is better to wait out the entry. In a flat, signals are much weaker.

The optimal expiration time is 3 candles. However, for large TFs, the expiration may be less. After H1, you can use an expiration time of 1 candlestick, which will be quite enough. But for small time frames, it is better not to shorten the expiration time.

Pay attention to the size of the candle. A good pin bar should match the average candle size on the chart. Only by the size of the tail we can find out how far the price has traveled. Take it as a rule: if the range (maximum-minimum) of the pin bar is 2-3 times less than the range of the previous candle, skip the entry.

A much stronger signal can be obtained by combining several factors. As you know, the price, like the flow of the river, goes in the direction of least resistance. That is why the presence of a support ( support or resistance level ) at the pin bar already indicates the presence of a strong signal, since it will take more energy to overcome an obstacle than to bounce.

Pin Bars and Binary Options - strong strategy
An additional confirmation of the forecast is also the formation of a pin bar at the 38.2, 50 and 61.8 Fibonacci retracement levels . In this case, we are looking at natural retracement levels. It is also good if there is support in the form of a support / resistance level .

Pin Bars and Binary Options - strong strategy

Examples of

Pin Bars and Binary Options - strong strategy

Due to its simplicity, the strategy gives real freedom and, in some ways, allows you to develop your own “sense of the market”. For full-fledged trading, you just need to have a historical chart of the instrument and the ability to display the price in the form of Japanese candlesticks.

After determining the pin bar, we wait for the breakout of its maximum (in the case of a bullish pattern) or a minimum (in the case of a bearish pattern). Do not enter immediately after the pin bar appears on the chart!

Naturally, this will not completely eliminate false entries. As you can see in the example below, one login was still unsuccessful. As we can see, there was a counter-trend signal completing a small correction. It’s better not to argue with the main trend.

Pin Bars and Binary Options - strong strategy

The model works better on larger time frames. However, many traders prefer small TFs due to the small number of trades on large periods. In general, for a more active trading style, choose a small period, but in this case, choose only the most correct setups for trading.

Pin Bars and Binary Options - strong strategy

Conclusion

Pin Bars and Binary Options - strong strategy

One of the main advantages of the strategy is its amazing simplicity. It is enough to learn how to accurately identify the candlestick pattern on the chart and have an understanding of the direction of the main trend – no auxiliary tools are required for this. The only thing is to be careful with counter-trend and flat signals. To reduce the proportion of false entries, trade only perfect setups and do not enter where in doubt.

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