Do you know why it is called a “plan” and not an exit “strategy”? Because I want you to understand that you need to have an exit trading plan before placing an order with Pin Bar or any other methods. Give yourself a reasonable entry and exit plan in each Forex trading order in Olymp Trade to improve profits and limit risks.
There are 2 exit plans:
1. Exit when you’re at a loss
2. Exit when you’re making profits
I put the exit on loss first. Most people think about how much profit they make before thinking about losing. But to trade successfully, you need to measure all possible risks. So I will prioritize the exit plan when I’m at loss first.
It must be remembered that always define an exit plan before determining a profit target. This change in mindset will speed your trading improvement because it makes you more defensive and disciplined.
Plan to set stop loss when trading with Pin bar candlestick
How to determine the loss for a Pin Bar signal? Let me suggest. The best place to place a stop loss is above or below the tail of that Pin Bar.
For a bullish Pin Bar setup, we will place the stop loss below the Pin Bar tail. Likewise, the upper tail will be the stop loss on a bearish Pin Bar signal. The distance to place the stop loss depends on the style of each trader as well as the moving habits of the currency pair being traded. But it is best to be a small distance from the Pin Bar tail to avoid being swept by the market.
Plan to take profit for Pin Bar
This part is quite difficult to visualize, but I will explain it in a way that is easy to understand.
The first thing you should do is determine the support and resistance levels on the chart. Professional traders will often take profits at levels with Pin Bar. Since the price is less likely to break through those zones, taking profits there would be safest. Please correctly identify the important levels before looking for entry points. That will help us know whether the Pin Bar setup is “delicious” or not.
I have the habit of looking for levels on the chart before determining a Pin Bar entry to make sure I haven’t overlooked a factor that could affect the trade I’m about to open.
In the chart above, can you see the nearest support level? It seems that the price level of 1.10780 is the most reasonable and safe support zone to place a profit-taking point. Although the market could fall further, it is always best to place take profit at the nearest support or resistance level. When you get used to entering orders with Pin Bar, you can observe price movements at important levels to predict whether to hold orders longer or not.
Analysis of advantages when the price breaks the nose of Pin Bar
Reading this far, you can understand how to enter and exit orders based on Pin Bar. So we will have a little test for you to remember longer. In the above case, is there anything wrong with us entering an order when the price breaks the nose of the Pin Bar?
The nearest support level (take profit target) is too close to the Pin Bar. If you enter an order by waiting for the price to fall below the nose of the Pin Bar, your profit rate will not be 2R while the risk is already 1R. So what is the best way to trade here? If you think that you have to enter at 50% Pin Bar then it is reasonable, ok you are right.
If we use the strategy of waiting for the price to go lower than the Pin Bar’s nose, we will set stop loss at 1R and target profit at 1.8R. This makes it impossible for you to achieve a 1:2 ratio. Therefore, if we enter the trade this way, we will lose many advantages. If using the 50% Pin Bar entry method, the stop loss is still at 1R, and the take profit of 2.5R is too great. Have you seen the benefits of a 50% Pin Bar candlestick strategy?
If we accept the risk of $100 and wait for the price to drop below the Pin Bar’s nose to enter the order, we will only get $180. But if you use the 50% Pin Bar candlestick strategy, you get $250 with the same risk of $100. Then you already know how to choose the best way to benefit yourself.
Things to keep in mind when planning to trade with Pin Bar candlestick
Here I will summarize the important points to keep in mind when setting up a Pin Bar exit plan.
- Always choose a setup where the rate of return should be twice the risk.
- It is recommended to use the method of 50% Pin Bar candlestick to maximize profits.
- Set a stop loss a small distance from the Pin Bar tail to avoid being swept by the market.
- Calculate stop loss before thinking of taking profit.
- Use the nearest support and resistance level as a target to take profits
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