Technically Konan, this is not true per say and a misnomer that’s been perpetrated in the PA threads/ideas out there.
We do not need a pin bar, or engulfing bar, or any special type of bar to initiate a trade.
Why?
Because those bars are the ‘RESULT’ of order flow, not the ‘CAUSE’. They are reactions of buying and selling that are easy to identify, but they are not the only ones needed to execute a trade.
Sometimes they can be useful to initiate ones - other times not at all, nor even present to trade a signal.
Oftentimes you can just trade the level, and use pure price action models (not signal bars which is what these are) to initiate a trade.
If you learn to read the order flow behind the price action using the proper models, then you will not need a signal bar to be an engulfing bar, pin bar, inside bar, or particular candle signal to initiate a trade.
This is something that has been espoused out there by people who try to make PA trading seem simple by using this model, ‘all you have to do is recognize these three signal bars + trend + support’ to make a trade.
If it was only that easy, banks would not be spending 10’s of thousands of dollars and hours training their traders. Some bank traders will have to do 4,000 trades before they can trade the banks money. But…but…but…what about the three simple setups to trading price action is all you need mantra?
Well, you should be asking yourself that same question…if it was that simple and easy, a) the banks wouldn’t have the training they do because it doesn’t take 4,000 trades to master a pin bar, and b) everyone would be making money trading because learning those setups, and the few other things with it would not take long to be really strong at.
Hopefully this clarifies it and gives you some food for thought.
Kind Regards,
Chris Capre
