This section details how the pin bar can be played. The advanced tutorial provides more details of how a more experienced trader might approach the pin bar. Traders that are new to pin bars may put a limit/stop order under the bottom of the pin bar. It is placed 10 pips under to account for a false break-out (unlikely to be 10 pips). When this order has been triggered then the trend will probably be heading in the opposite direction of the nose. This approach also means that the trade does not need to be monitored so closely.
One question that traders may want to ask themselves as they contemplate entering a trade is this: “When will I know if the trade has gone against me and this setup is not working?”
When you know how to tell whether or not your trade setup has failed and is not going to work you can begin to calculate how much risk you can take. These calculations are performed before placing orders so that the appropriate level of risk (on the basis of account size) may be determined so that an appropriate position size may be taken.
The conservative approach to placing stops is to place stops 10 pips from the end of the pin-bar/nose (the point where the prices are not going, far from the eyes). This level is acting as resistance now. The stop loss and entry orders are placed 10 pips away from highs and lows because sometimes prices will creep a little big past these highs or lows which can have a negative impact on the trade setup.
Traders need to discover their own preference for stops and risks based on the pin bar. The Advanced Tutorial gives some more ideas of how to enter and set the stop losses.
By : Lincoln (a.k.a. lwoo034 at Forexfactory.com forums)
Next .... Trading the Pin and Managing Risk