In today’s post, I’m going to show you 4 secrets to trading pin bars.

When traders hear pin bar secrets they usually think of things like making sure the wick sticks out from the surrounding price action, entering on the 50% retrace of the candle, or watching for the pin to form at a specific technical levels.

But while these are all well known secrets, there are others only a few people know about.

I’m going to show you 4 of these today, and how you can use them to find and take higher probability pin bar trades.

Lets get to it.

#1. The Multiple Meanings Behind Pin Bars

1. The Multiple Meanings Behind Pin Bars

Have you ever spotted what looked like the perfect pin bar?

A long wick. A small body. Forming at a major support or resistance level.

Everything the textbooks tell you to look for.

You enter the trade expecting a reversal…

…only for price to ignore the signal and continue trending in the same direction.

Sound familiar?

It should, because it happens far more often than most traders expect.

And that’s strange when you think about it.

Traditional price action teaches that pin bars with long wicks, small bodies, and confluence with key technical levels are the highest-probability reversal signals available. If that’s true, why do so many of them fail?

Many traders simply accept it as randomness. Sometimes a setup works, sometimes it doesn’t.

That’s partly true.

But there’s another explanation that’s rarely discussed:

Not all pin bars are created for the same reason.

Almost every price action book explains that pin bars form because buyers and sellers battle for control of the market.

That’s correct—but it’s only part of the story.

What’s far more important is who is buying or selling, and why they’re doing it.

Those two factors determine whether a pin bar is likely to reverse the market or simply become another failed signal.

For example, imagine institutional traders have been long for several days.

After a strong rally, they’re sitting on substantial unrealised profits.

Rather than opening new sell positions, they decide to lock in some of those gains.

Their selling temporarily pushes price lower, creating a bearish pin bar.

To the average trader, it looks like a classic reversal signal.

But in reality, nothing has changed.

The institutions aren’t turning bearish—they’re simply taking profits before looking to continue buying later.

Once that selling dries up, the uptrend resumes and the pin bar fails.

This is why relying solely on the shape of a candle can be so misleading.

The candle tells you what happened.

It doesn’t tell you why it happened.

In my experience, excluding news-driven spikes, institutional order flow creates the vast majority of meaningful pin bars.

Those pin bars generally form for one of two reasons:

• Institutions are taking profits on existing positions.
• Institutions are opening new positions intended to reverse the market.

The distinction is critical.

Profit-taking pin bars are extremely common because institutions are constantly managing risk and locking in gains. Most of these candles don’t mark major turning points—they’re simply temporary pauses within an existing trend.

True reversal pin bars, on the other hand, occur when institutions begin building positions in the opposite direction. Those signals are much rarer, but they carry far greater significance.

So how can you tell the difference?

While identifying institutional reversal entries requires a deeper understanding of market structure and institutional behaviour (which I cover in detail elsewhere), spotting profit-taking pin bars is surprisingly straightforward.

Simply examine the move leading into the candle.

Did the market make a sharp, impulsive rally or sell-off immediately beforehand?

If so, there’s a good chance the pin bar formed because institutions were taking profits.

After a large directional move, institutional traders often reduce exposure, bank profits, or free up capital for future opportunities. That temporary wave of buying or selling can easily create a pin bar without signalling any genuine change in trend.

For example:

This bullish pin formed from the banks taking profits off sell trades.

How do I know?

Because it formed almost immediately after a sharp decline. The sharp rise pushed the bank’s trades into a lot more profit than they were at previously. Naturally, they decide to take off this newfound profit off. When they take profits, price rises, resulting in a bullish pin bar forming.

What happens later…

After a small retracement price falls again, confirming the bullish pin formed because the banks took profits off the sell trades they’d placed earlier on in the decline.

The key lesson is this:

Never judge a pin bar by its appearance alone.

Always ask yourself what was happening in the market before it formed.

Understanding the motivation behind the candle is often far more valuable than analysing the candle itself.

So to find if a pin has formed from profit-taking, you just look at the move that precedes it.

If the pin formed shortly after a sharp rise or decline, it’s probably formed from the banks taking profits. The sharp rise/decline would’ve drastically increased the amount of profit on their trades, so they would now want to take some off to secure it.

#2. Small Pins Have A Low Probability Of Being Successful

Most price action traders are taught that three key factors determine whether a pin bar is likely to produce a successful reversal:

• The size of the wick.
• The size of the body.
• The technical level where the pin bar forms.

And for the most part, this is correct.

A pin bar with a long wick, small body, and formation at a significant support or resistance level generally has a higher probability of working.

But only if the pin formed for the right reason.

As explained earlier, the appearance of a pin bar alone doesn’t tell you what caused it to form. A beautiful-looking pin bar can still fail if it was simply created by profit-taking rather than genuine institutional positioning.

However, there’s another important factor most traders overlook:

The overall size of the pin bar.

Not just the wick.

Not just the body.

The entire range from the high of the candle to the low.

The size of the pin matters because of how pin bars actually create reversals.

Before almost every pin bar forms, price first creates a large range candle.

You may know these as momentum candles or trend candles.

On the surface, these candles simply show that price has moved aggressively in one direction.

But underneath the surface, they reveal something much more important:

A large number of traders have committed to one side of the market.

When traders see price rapidly rising or falling, they often assume the move will continue.

They fear missing out.

They see momentum and think:

“I need to get in before this runs away from me.”

So they jump into trades in the direction of the move.

A large bullish candle encourages traders to buy.

A large bearish candle encourages traders to sell.

The larger and more aggressive the move appears, the more convincing it becomes.

By the time a pin bar begins forming, many traders are already positioned in the direction of the previous move.

And this is where the reversal begins.

Imagine price has just made a large decline.

Thousands of traders have entered short positions because they believe the market will continue falling.

Now imagine price suddenly starts moving higher.

What happens?

Those traders begin losing money.

Many decide to exit their positions.

But here’s the important part:

Closing a trade requires placing an order in the opposite direction.

A trader who is short must buy to close their position.

A trader who is long must sell to close their position.

Therefore:

• Losing short positions create buying pressure.
• Losing long positions create selling pressure.

When enough traders are forced to close their losing trades, that order flow pushes price further in the opposite direction.

This creates a chain reaction:

Price moves against traders → traders close losing positions → opposing orders increase → price moves further → more traders are forced to exit.

Eventually, this creates the pin bar and can fuel the reversal.

This is why the size of a pin bar matters.

The larger the move that creates the pin, the more traders are likely caught on the wrong side of the market.

More trapped traders mean more potential orders waiting to enter when those positions are closed.

So a small pin bar has a problem.

A small pin usually means fewer traders participated in the move.

Fewer traders entered.

Fewer traders are trapped.

And fewer traders need to close their positions when price moves against them.

As a result, there is less forced order flow to help drive the reversal.

Now, this doesn’t mean every large pin bar will work or every small pin bar will fail. Context still matters—the reason the pin formed and where it formed remain critical.

But when comparing two otherwise similar setups, the larger pin bar generally has a greater chance of producing follow-through because it represents a larger imbalance of traders caught on the wrong side.

So how do you determine whether a pin bar is small?

There isn’t a universal measurement.

Every currency pair, market, and timeframe has different volatility, meaning a 20-pip pin on one market may be insignificant on another.

Instead, compare the pin to the surrounding price action.

A small pin is one that looks insignificant compared to the candles around it.

Even if it has a long wick and a tiny body, the overall range is still too small to suggest many traders were involved.

These are the pins you want to be careful with.

A textbook-looking wick doesn’t automatically make a high-probability setup.

The entire story behind the candle matters.

3. Confluence Doesn’t Matter That Much

Confluence is a big concept in price action trading, being used as a way to confirm high probability trades and to find points where the price is likely to reverse.

Back in my early days of trading, I was a big proponent of confluence.

I thought it was a great way to increase the probability of trades, and the concept made a lot of sense; if multiple technical levels converge at one point, it makes sense price has a better chance of reversing at that level.

But then one day I stopped…

I stopped not because I wanted too, but because I realized confluence isn’t anywhere near as important people make it out to be.

The problem with confluence isn’t that it doesn’t work. It’s that the key feature that determines whether a pin or engulf will cause a reversal is what caused it to form in the first place.

Take this pin bar for example…

This pin is the typical high probability bullish pin bar. It has a big wick, a small body, and has formed at a major support level.

By anyone’s standards, this pin should cause price to reverse.

But watch what happens…

After a tiny retracement, price keeps falling.

Rather than cause a large reversal as it should, given it’s a high probability pin, it only caused a small retracement before price continued to fall.

So why did this pin with all it’s features and confluence fail to cause even a small reversal?

The answer is simple:

Because it’s didn’t form from the banks placing trades, but taking profits.

As I said earlier, pin bars don’t all form for the same reason.

Most, including the one above, form a result of the banks taking profits.

The problem with confluence is that it doesn’t really effect whether a pin bar will cause a reversal as what’s caused the pin to form.

If a pin forms from the banks taking profits, it doesn’t matter how much confluence it has with technical levels or how big it’s wick is. It won’t cause a reversal because the banks still want price to continue in the same direction once they’ve taken their profits off.

Does this mean confluences is useless then?

Not at all…

For finding points where price may reverse in the future, it’s still hugely important.

But for candlesticks patterns, like pin bars and engulfs, it’s not essential. What causes the pin/engulf to form overrules all other probability enhancers, whether that be wick size, overall candlestick size or what confluence the pattern has with other technical levels.

4. Pin Bars With Giant Wicks (Almost) Always Causes Reversals

The wick is one of the defining features of a pin bar.

It’s what makes the candle stand out on a chart, and it’s one of the most important factors in determining whether the pin has the potential to produce a reversal.

Of course, as we’ve already discussed, the reason behind the pin forming is the most important factor. A perfect-looking wick means very little if the underlying order flow doesn’t support a reversal.

But once the cause of the pin is understood, the size of the wick becomes extremely important.

Most traders already know they should look for pin bars with large wicks. It’s one of the first lessons taught when learning price action.

However, there’s a big difference between a normal large wick and what I call a giant wick.

A normal large wick might be several times larger than the body.

For example, many traders consider a wick around 2-3 times the size of the body to be a strong pin bar.

But I’m talking about something much more extreme.

A wick that completely stands out from the surrounding price action.

Something like this:

Notice how the wick on this pin bar is roughly five times larger than the body.

That’s already much bigger than what most price action books consider ideal.

Now compare that to a true giant wick:

A big difference, right?

Pin bars with wicks this extreme don’t appear often.

But when they do, they can represent some of the highest-probability reversal opportunities available.

Why?

Because it comes back to how pin bars actually form.

Remember, a pin bar begins as a strong directional move.

During that move, many traders enter positions expecting price to continue in the same direction.

A large decline causes traders to sell.

A large rally causes traders to buy.

The more aggressive the move, the more convincing it appears—and the more traders are likely to jump in.

Then something changes.

Institutional traders begin buying or selling, or they take profits from existing positions, causing price to move sharply in the opposite direction.

As price reverses, the traders who entered during the original move begin losing money.

Many of them are forced to close their positions.

And as we discussed earlier, closing a position requires placing an opposing order:

• Short traders must buy to close.
• Long traders must sell to close.

This additional order flow pushes price even further in the opposite direction, creating the long wick we see on the chart.

Now think about what happens when the original move is enormous.

A small decline might convince a handful of traders to sell.

A massive decline, however, can convince thousands of traders that a continuation is inevitable.

When those traders are suddenly trapped, the amount of buying pressure created by their exits can be significant.

That’s why giant-wick pin bars are so powerful.

The wick itself isn’t magical.

It’s evidence of something happening beneath the surface:

A large number of traders committed to one side of the market, only to be caught when price violently moved against them.

The larger the move that created the pin, the greater the potential imbalance between trapped traders and opposing order flow.

And when that imbalance is large enough, it can fuel a powerful reversal.

Simple.

Of course, giant-wick pin bars don’t appear every day. They’re rare by nature, which means they shouldn’t replace your existing trading strategy.

Instead, think of them as a high-quality additional setup.

When one appears in the right context, it can provide a powerful opportunity to trade alongside the larger market reversal.

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Summary

Hopefully, this article has given you a deeper understanding of how pin bars actually work.

Most traders focus only on the appearance of the candle:

• How long is the wick?
• How small is the body?
• What level did it form at?

But the real edge comes from understanding the story behind the candle.

Why did it form?

Who was trapped?

What caused traders to enter, and what will force them to exit?

Once you start looking beyond the candle itself, pin bars become much more than simple reversal patterns—they become a window into market psychology and order flow.

These concepts may take time to fully understand and apply, but with practice and screen time, they can become a valuable addition to your trading approach.