The Pinocchio binary options trading strategy is famous for telling lies about the movement of the market. The Pinocchio or Pin bar is a candle bar with a really small body and a long wick. When the price of an asset starts moving in one direction, the wick of the candle gets longer, which is an indication that the market will likely move in the opposite direction, and a trader trades against it. The Pinocchio helps to reveal the behavior of the buyers and sellers in a market, and this can be exploited to make huge gains, though it is not always reliable.
When a trader is using a Pinocchio trading strategy, the trader places a CALL when the wick is short and places a PUT when the wick is long.
The Pinocchio provides the best results when combined with other trading tools such as technical indicators like trend lines, confluence, divergence, overbought and oversold levels, Price Action, and so on.
The Pinocchio strategy helps traders to determine the real movement of a trend. It also helps to identify false breakouts, and support or resistance levels that will change during trading. If a trader could patiently wait out a trade to see if it becomes a Pinocchio, the trader has a better chance of winning on the trade as the Pinocchio reveals the true movement of the market.
The Pin bar or Pinocchio is not advisable for the new trader as it requires some level of experience to read the momentum of the market accurately.
If you wish to trade with the Pinocchio strategy, the most crucial success factor is timing. Whenever the Pinocchio candlestick appears on the charts, place your trade immediately. Care should, however, be taken when using the strategy, as it is not sufficient in itself as a guarantee for winning trades. Instead, it should be used with other factors that could impact the price of the asset. Make sure to also limit your investment to an amount that won’t hurt your account, in case the strategy backfires. When used correctly, the Pinocchio trading strategy can give you up to 70 percent profit on investments, but it can also lead to a loss of investment if the timing is not right.
This article may also be interesting: Trend Trading Strategy.