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The Pinocchio Trading Strategy

The Pinocchio Trading Strategy


The Pinocchio trading strategy provides you with the accuracy you need to get an edge on the competition, as you can see the market behavior with proper visuals. This is a trading strategy that deals with a price action reversal formation.

The Pinocchio trading strategy relies on a setup called a Pinocchio or “pin” bar.  The pin bar has a long upper or lower wick, also called a tail, and a smaller body. You can use candlestick charts to see the formation, as they show price action clearly.

The open and close should both be near one end of the bar. It’s best when it is closer to the end of the bar. The open and close must also be close together or even equal. The tail protrudes from the body and longer tails are better.  The tail shows the false breakout, and the actual trade should be taken in the other direction.  It’s this long tail that created the name Pinocchio bar, because the long tail is like Pinocchio’s long nose.  The tail grows longer as the market lies about direction, just as Pinocchio’s nose got longer with each lie.

The Pinocchio trading strategy is very accurate. It’s a reliable tool for people who understand market analysis and for those who perform regular research. If you’re a person who takes pains to do research and has an eye for detail, there is almost zero probability of facing false breaks with the help of this strategy.