Originally, this trading strategy was referred to as the paint bar Forex trading strategy. This is because it involves the colouration of the candlesticks, as if they have been painted in different colours. Some traders still refer to this strategy as the paint bar strategy, but we prefer calling it the PinBar Forex trading strategy.
If you search for either of the strategy’s names right now on Google, you will probably find it is a paid service that could cost you up to $2,000, that’s how successful it is. Fortunately for you, we won’t charge you, as we don’t charge any of our visitors for the other great trading strategies you will find right here.
Introducing the PinBar Forex trading system
Before we go any further, be warned that this trading strategy may seem complicated by the number of technical indicators. Normally, we don’t recommend crowding the Forex charts with indicators, that just makes the actual trading more difficult. In this case, though, there are 7 different indicators, which you shall have to add to your Forex trading platforms.
We’re not going back on our word, or changing the story, this strategy works just fine even with the seemingly excessive use of indicators, and you shall see why even before you complete reading this section. Alright, now to go to the reason you have come here, the indicators. As mentioned before, there are 7 of them:
The PBF_iTunnel indicator
This indicator is represented by two lines which tell us whether the market sentiment is bullish or bearish. When the colour of these two lines is blue, the markets are bullish, and when red, the markets are bearish. This indicator also has the added benefit of telling a trader when to consider opening a trade. (Forex market sentiment indicators)
You see from the image above that markets turn bullish when prices cross above the indicator and vice versa. By observing the relation of market prices and this indicator, it is possible to determine the ideal time to make a move
The moving averages
In the PinBar Forex trading strategies, we’re going to employ two pairs of moving averages, both exponential. The first pair, PBF_2EMA_Color, is represented by the dotted lines on the main window. These are moving averages spanning longer timeframes, which is why they seem more lagging. Nevertheless, these too change colour from green to red when markets are either bullish or bearish. Just like using normal moving averages, you buy when markets are trending above and vice versa. (Forex strategy on based on MAs)
The second pair of moving averages, PBF_Fast_3Mas, are much faster, which is why they are close to market prices. These ones are solid lines, but also coloured accordingly – green for bullish and vice versa. You use these to catch shorter market movements and to identify when the market sentiment may be shifting
Our oscillating indicator in this trading strategy will be the PBF_OSOB indicator, with the initials standing for oversold/overbought. Typically, you sell when the market is overbought and vice versa. The reason for using this particular indicator rather than any other oscillator is that it is more visual. Other oscillators like the TDI_Red_Green or stochastic have a lot of stuff to check like the ‘cross’, but here it’s all laid out. (Best technical indicators and how to use them)
This is really an added bonus for the scalpers keen on catching smaller market movements. From the image, this indicator is represented by dots at the peaks and troughs, showing when the short-term trend ended. Long-term traders can take advantage of it too, by learning when long-term trends may be coming to an end.
This indicator has been modified to show you the prevailing market trends in different timeframes so you won’t have to keep switching from one to the next. A strong signal is determined when all three timeframes show the same market sentiment concurrently.
A modified MACD indicator, it not only shows the market conditions, overbought or oversold, but also by how much.
How and when to place orders
Basically, you want all the indicators to match in colour before placing a trade with this trading strategy – that is the beauty of the PinBar trading strategy. Since all indicators are coloured either in green, blue or red, the more indicators show the same colour, the stronger the signal.
Carrying on from the image we used in the introduction section, we see that the strongest trends were preceded by a similar colour representation from most of the indicators. To see the trading system in action, let’s separate the chart into the 6 main sections/trends:
In the first section, A, the downtrend begins when the PBF_Scalper_Show_Me indicator shows a dot at the top, signalling a turn to the downside. The candlesticks are painted red, and the PBF_Squeeze is also red and showing a bearish sentiment. All the moving averages are red in colour, and some of the PBF_Trend_Bars are too. The downtrend is confirmed when market prices cross the moving averages to the downside.
In the second section, B, the downtrend is ended when the PBF_OSOB indicator falls deeply into oversold territory, followed by a flag from the PBF_Scalper_Show_Me indicator. Still, this is not a good position for a trade because the moving averages are red in colour and the PBF_Squeeze does not have a clear signal. That comes in the next section, C, when prices cross the moving averages and most indicators turn green.
Within section D, a scalper may have already cashed in their profits when the PBF_Scalper_Show_Me indicator showed a possible trend reversal. A long-term trader, however, would have noticed that the PBF_Squeeze indicator remained bullish and so did the PBF_Trend_Bars. In sections E and F, we see the opposite happening, as PBF_trend_Bars go back to red one by one and the PBF_Squeeze indicator turns bearish.
So, briefly, in order to place an order, just look at the colour of the indicators, which should match that of the candles themselves. At the beginning of a trend, a few indicators will change colour, with more of them joining in as the trend grows stronger. For scalpers and intraday traders, I recommend at least 3 indicators showing signs of a trend reversal before placing an order. As for more cautious, swing traders, at least 5 indicators confirm a strong trend in progress.
Adding the indicators
All of these indicators are available in the link below in a compressed file. For detailed instructions on adding technical indicators, see the video below. Attached is also a template file, which automatically loads all required indicators at once if you don’t have the patience. Also keep in mind that you can always tweak and change the values and colours of these indicators to your heart’s desire.
Learn more about technical indicators in this video: