GUIDE TO PRICE ACTION ENTRY SIGNALS
How to find, enter & place price action trades
Using simple and repeatable price action triggers that form time and again in the markets can be a great way to find entries into the market.
These triggers will often get you in at the best time and just as the market is about to reverse, giving you the optimum entry price.
Why Are Entry Signals so Important?
Buying and selling a currency pair in order for you to gain profit from the differences between the entry and exit price is your main objective in Forex trading. Buying low and selling high is universal. Some traders spend more time thinking profoundly on entry points, whilst others believe that success sometimes relies on how a trader exits their trades.
Knowing the value of a currency pair that will appreciate in the future isn’t enough unless you have a clear conception of when the appreciation will occur.
Remember the saying; “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime”.
Just like in trading, you don’t need to get the signals, but learn how to find them and teach yourself how to actually get profits for a lifetime.
Without the mastery of trade timing and good trigger points you will never make any profits. That’s why a trader uses charts in their daily trading.
You can use charts to determine everything that is happening in the Forex market. One of the most useful and common types of charts is the candlestick chart.
How Can Candlestick Charts Help You?
It is a type of financial chart that is more visually appealing than the common bar chart, thus making price action easier to interpret and analyze.
It can also help an investor make wiser buy and sell decisions because of its recognizable patterns.
Patterns play a very crucial role in trading, so here’s to a breakdown of the most helpful patterns for your daily trading needs.
Pin Bar Reversal = Pin Bars
Pin bars are one of the most powerful price action patterns in Forex trading as they are easy to recognize which means both professionals and retail traders use them.
What is a Pin Bar?
The pin bar (also known as Pinocchio Bar) formation is a reversal setup. It is a one candle / bar formation that has an obvious large tail or shadow either up or down.
A pin bar is a single candlestick setup that clues price action into potential reversals in the market.
It also has an elongated wick that sticks out.
There is also a Fake Pin Bar that is different than the normal pin bars.
Because of the price action, you can now determine the difference between the two. If a long wick sticks out from recent prices then it’s a pin bar, if the long wick does not stick out then it’s not a genuine pin bar, but rather a ‘FAKE PIN BAR’.
How to Spot the Pin Bar?
Bearish pin bars form after several bullish candles and have a nose that is higher than the top of the previous candle.
The nose must be at least 75% of the candle size and the candle body must be less than 16%. (Vice Versa for a Bullish Pin Bar).
Pin Bar Entries
The best way to trade any market is to trade inline with the trend.
In a trending market, a pin bar entry signal can offer a better risk reward with lower risk.
If the pin bar shows a rejection to lower prices, it’s a bullish pin bar since the rejection shows the bulls or buyers are pushing price higher.
Aggressive - High Potential Reward and Risk: 50% Retrace
This entry involves taking a 50% retrace of the pin bar or other reversal candles wick.
For this entry you would be setting a trade entry and waiting for price to move higher or lower 50% in the opposite direction of where you actually want price to go for your trade.
You do this to get a much tighter stop loss and potentially higher reward pay off.
Medium Reward / Risk Entry: Entry on Close
This entry on reversal trade signals involves entering as soon a price has closed. When the reversal candle such as the pin bar has closed and it meets your criteria, you simply enter the trade.
Lower Reward / Risk: Entry on Confirmation / Break Higher or Lower
With this entry type you are creating a trade entry and waiting for price to break higher or lower, above or below the pin bars high or low.
Price is then breaking in the direction that you are looking for price to move.
This is lower risk, but can create bigger stops that will give you lower reward.
Each entry has it payoffs for potential risk and reward.
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