Pinocchio strategy

You probably remember the famous pinocchio character. It is a wooden doll and when it is lying the nose of the doll starts to grow. Something similiar happens in this strategy as you will see but insted of the nose, the candle bar is trying to lie us here.  But when can manage to turn this into profits of course. Pinocchio bar, shortly known as pin bar has a small body with very long line(or nose in this case). You can see example of pin bar in the picture.

pin bar

As you know now Pinocchios nose grew if he told the lie. Same things applies here with pin bar. When the line goes up, it has higher probability that the price will go opposite and that this initial direction was actually a lie and missleading information. That is why the similiar name to strategy. So to give you example, if the line on the pin bar is going up you will short this and if the line is going down you will trade a call for long. Entry point is not really specified since it depends from trader to trader but most of them enter the trade immediately after this pin bar closes.

pinocchio strategy

WHERE IT CAN GO WRONG?

Problem can be at the start when you need to get ahold of the strategy to get expirience and also of course if you not enter the trade when it is needed since timing is important here. It maybe is not really newbie friendly even if it looks like that at first sight but it is simple when you get a grip.

WHY IT IS GOOD?

Assuming you are trading in trend market and that you take trade only when in line with the trend. Then this is definitely one of most reliable strategies since it can offer you high accuracy because the pin bar is giving you a good indication how are participants on the market behaving. You just have to be disciplined to wait for the par to close and become pinocchio so you get clear indication. Always be aware of your surroundings when trading on the market so you do not follow strategy blindly.

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