One of the primary skills you need to acquire as a Rakuten forex trader is knowing how to trade pin bars. This is because pin bars are the most common price action patterns you will see form on your trading charts. Lucky for you, trading pin bars on their own is not as difficult as other people make it out to be. This is because you only require a small amount of knowledge on why pin bars form in the market which you can easily research on.
You need to understand pin bars on a much deeper level if you want to use them as a viable trading strategy. You can acquire this knowledge and learn more about pin bar trading by reading articles or blogs on the subject. If you are a beginner, then you're in the right place. Here is a guide on how to trade with pin bars.
Determine which direction the current trend is going
The first step to successfully trading pin bars is determining which direction the market is currently trending in on the time-frame that you're using to place all of your trade-offs.
You can determine the direction that the market is currently tending in by checking to see if the most recent swing low that has formed in the market is lower than the previous one or if the most recent swing is higher than the previous one. If the high is higher, then it means that the trend is up and if the low is lower, then it means the trend is currently down.
Usually, when a lower swing is made, you would start looking for entries into short trades since the trend is now considered to be down. On the other hand, when you see a high swing being broken by a higher swing, you might want to start looking for opportunities to go long because the market is heading towards an up-trend.
Enter the trade
Once you have determined the direction that the current trend is going and you have identified that a pin bar has formed in the market, the next step you need to take is to enter your trade. It is important to know that all pin bar trades ought to be entered using market orders which is where your trade will be placed once you click on the 'Execute Order' or 'Place Trade' option on the Rakuten trading platform.
Some trading guides will teach beginners to enter a bar pin trade using pending orders placed either at the high or low point of the pin bar once the pin has formed in the market. However, this method is not always the best because there are many times when the market refuses to break through the low or high pin before reversing it. In such situations, you will have to take a back seat and watch a trade become profitable with you because you decided to use a pending order to enter your trade. With market orders, you will never have such a problem.
Place your stop loss
One final thing you need to do before actually entering your trade is to ensure that you have a stop loss placed with your trade. Failure to this, you stand the risk of losing an unlimited amount of money.
Ensuring that you have placed a stop loss is quite easy. If you're using an online broker from Rakuten, all you need to do is click on the type of trade you want to place and on your screen navigate to where it says 'Stop Loss' then type in the price you would like your stop-loss to be placed. Once you've done this, the only thing left is to click the submit option and just like that you will have a stop-loss on your trade.
After you've followed the following steps now, you need to find something to keep you busy for a couple of hours. This will help you avoid closing a trade prematurely before it has a real chance of being successful.