Your going to need support and resistance on your chart to trade this strategy, also trend lines are a good addition if they are validated with two highs or lows and have not been broken.
After you have these things on your chart we are going to look for two kinds of candlesticks. The first is the inverted hammer, price opens low, pushes way up then comes back down to close near its open. This pin bar forms in a down trend with the pin shooting up the direction price come from.
The second pin bar we are looking for is called a hanging man, this happens in a up trend when price pushes way down then comes back up to close near the open. A hanging man has a long pin pointing down in the direction the market just come from.
If my descriptions suck and you still can’t picture what a hanging man and an inverted hammer look like then you might have to check out some pictures on my blog. After you have identified one of these candlesticks it’s time to check and see if it happened near support and resistance areas.
If a bullish inverted hammer forms near support then you would enter a trade long, with a stop below the low or maybe a bit further away depending on how close it is, and a take profit at the high or twice the candle length.
If a bearish hanging man forms near resistance the you would enter short with a stop above the high and take profit below the pin or twice its length.
The pin bar strategy really couldn’t be any easier. With very basic market analysis and good money management this is a highly profitable system in the longer time frames. Happy Trading.