Lesson 2 of 6 · 8 min
Hammer and Pin Bar
Step 1
What it is
A hammer has a small body near the top of the candle and a long wick below. A pin bar is the same shape, and the name is often used for any candle with one very long wick.
The candle shows that sellers pushed price down during that period and buyers pushed it back. It tells you what just happened, not what happens next, and it means far more at a level that already matters.
Traders use it because the wick gives a very clear place for a stop. It is one of the easier candles to plan around, and also one of the easiest to over-trust.
Step 2
See it on a chart
A hammer on a volume spike, followed by a candle that closes up.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 3
The exact rules
What must be true before entry
- A long wick at least twice the body, after a clear move down.
- Volume above the recent average on that candle.
- A next candle that closes up.
What volume should show
Where to enter
Where the hard stop goes
Where the target goes
What invalidates the idea
- Price trades past the tip of the wick.
- The next candle closes below the hammer.
When not to take it
- It is in the middle of a range, far from any level.
- The wick is so long that 3:1 is not possible.
- Major news is due soon, or you would be trading outside your planned hours.
- You have just taken a loss and feel the need to win it back.
Step 4
Your turn: plan the trade
Price has risen, and a candle with a long upper wick formed on heavy volume. That is a shooting star. The next candle closed down. Mark your plan.
This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 5
The trap: trading the shape alone
Once you know the name, you will see hammers everywhere, and each one will feel like a signal. The shape is only the start. Ask where it formed, what volume did and whether the next candle agreed.
Take the Personal Litmus TestStep 6