Pin Bar Trading Strategy (Hammer and Shooting Star)

A Pin Bar is a single-candle price action pattern that shows a sharp reversal and rejection of a specific price level. It is characterized by a very long 'tail' (or wick) and a small 'body'.

The psychology is simple: price tried to go one way, but the opposing side entered the market with so much volume that they pushed price all the way back, leaving a long trail of failed orders. This is the hallmark of institutional intervention.

Not all candles with wicks are pin bars. For a high-probability setup, the Wick must be at least 2/3 (66%) of the total length of the candle. The body must stay small and be located at one end of the candle.

If the body is in the middle, it's a Long-Legged Doji (indecision), not a Pin Bar (rejection). The further the wick extends beyond the surrounding price action, the more powerful the signal.

The Hammer (Bullish): Forms at the bottom of a move. It has a long lower wick and a small body near the top. This shows that sellers were in control, but buyers overwhelmed them to close the candle near its high.

The Shooting Star (Bearish): Forms at the peak of a move. It has a long upper wick and a small body near the bottom. It signals that buyers finally exhausted their strength and sellers have taken over.

Because Pin Bars represent violent shifts in sentiment, they often occur during high-volatility news events or at major psychological levels. This is where Broker Requotes and slippage are most common.

When price snaps back 50 pips in seconds, the liquidity bridge might struggle to fill your order at the 'tip' of the wick. Pro tip: Use 'Limit Orders' at the 50% retracement of the pin bar tail to get a better entry price and avoid being requoted during the initial frenzy.