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  1. #1
    Administrator Martin Kay's Avatar

    70% Win Rate - Possible with Pinocchio Strategy? !!!

    Hi guys, new strategy review by Bogdan, this time Pinocchio. Share your opinion or trading experience with this strategy here.

    Originally posted by Bogdan G. For the full review- click here.

    Pinocchio is one of my favorite trading strategies and from my experience with it I can tell you it has a 70% win rate with a 1:2 Risk:Reward ratio (sometimes I hold on to the trade for 1:3 R:R). However, it is better to see confluence of several factors when trading this one, not just the Pinocchio bar. In my book, this strategy definitely does not suck, but always be aware of the other factors that drive the markets, don’t just follow it blindly.

  2. #2
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    Strategy is good. Conclusion is simple :- Trade with trend. Success chances r good if used with risk reward ratio of 1:2 or more.

    But it is definitely NOT for beginners and even an intermediate level trader will have to work hard. Pro level traders have their own strategies . So if u already know market movements to some extent then this strategy may take u one step ahead of other intermediate level traders.

  3. #3
    Senior Member Grae's Avatar
    I definitely like the strategy!

    Trend plus entry after the close of candle are important. It is also wise to have a predetermined stop loss and take profit before initializing any trade... That way, you already know what to expect and what you can lose before you start.

  4. #4
    Master Member Bogdan G's Avatar
    What I like about the Pin bar entry is that usually price reverses pretty soon after the signal candle, especially if the S/R level is correctly identified and of course, as long as we are trading with the main trend.

  5. #5
    Specialist Member TAllen1429's Avatar
    Hi Bogdan,

    I have always found your described candlestick patterns to be very interesting although I have never constructed a strategy about them. No particular reason for that, I just got caught up in other ideas.

    So, if I am right, a “Pinocchio” candle, large wick and small body, is the equivalent to a ‘shooting star’ pattern and one with a large tail and small body equates to a ‘hanging man’. As you said, they are particularly effective in trends especially using the longer time-frames from the hourly upwards.

    I find such candlesticks patterns interesting as they represent investor sentiment very well when they occur. For instance, a long wick indicates strong selling pressure whereas a long tail suggests intense buying power.

    I noticed your Pinocchio strategy produces a 70% win rate. I was just wondering if you have ever used it as a triggering source to activate Binary Options using the appropriate currency pairs as the underlying assets.

    This is because you could have a money-spinner on your hands. For example, consider that you receive an 80% payout when in-the-money and a 10% refund when out-of-the-money.

    If you make 10 trades, then 7 will be winners and 3 losses. If you invest $100 in each one, then you will earn (7*$80)-(3*$90) = $290.

    Not a bad return. Could keep you in beer money at least.

    Regards,

    Terry

  6. #6
    Master Member Bogdan G's Avatar
    Quote Originally Posted by TAllen1429 View Post
    Hi Bogdan,

    I have always found your described candlestick patterns to be very interesting although I have never constructed a strategy about them. No particular reason for that, I just got caught up in other ideas.

    So, if I am right, a “Pinocchio” candle, large wick and small body, is the equivalent to a ‘shooting star’ pattern and one with a large tail and small body equates to a ‘hanging man’. As you said, they are particularly effective in trends especially using the longer time-frames from the hourly upwards.

    I find such candlesticks patterns interesting as they represent investor sentiment very well when they occur. For instance, a long wick indicates strong selling pressure whereas a long tail suggests intense buying power.

    I noticed your Pinocchio strategy produces a 70% win rate. I was just wondering if you have ever used it as a triggering source to activate Binary Options using the appropriate currency pairs as the underlying assets.

    This is because you could have a money-spinner on your hands. For example, consider that you receive an 80% payout when in-the-money and a 10% refund when out-of-the-money.

    If you make 10 trades, then 7 will be winners and 3 losses. If you invest $100 in each one, then you will earn (7*$80)-(3*$90) = $290.

    Not a bad return. Could keep you in beer money at least.

    Regards,

    Terry
    Yes Terry, bribe me with beer and I'll spill all my secrets
    Indeed you are very right: Shooting star/Hanging man/Hammer/Inverted Hammer are all Pinocchio bars or Pin bars (the same thing). I consider this as the general term for all those shapes. The differences consists of the place they appear and the direction the wick points in (and some minor differences in the proportions of the wick compared to the real body). But - and I don't want any of the new guys to take this the wrong way - if I was to explain the subtle differences between a Shooting star and an Inverted Hammer, it would be very hard for a novice to grasp. Believe me, I was there That's the reason why I chose the general term of Pin.

    Now for the other thing: yes, you could have a money-spinner on your hands, but...just like I say in the article: do not trade just any Pin you see on the chart of the underlying asset. The amount you talk about can be achieved, but discretion is needed and the most reliable candle formations occur on the Daily chart, 4H or even 1H so we are not talking about quick profits. There is no way I would try this on a 60 second expiry time. I am sure you know these things, but a new trader cannot make the difference between a tradable Pin and one that he just has to let go. So please, new guys, ask as many questions as you like about Pins, other candle formations or anything else. We are here to help you.

    All the best

    PS: last trade for the day - Long/Call on BEER/USD Expiry time: 1 BEER

  7. #7
    Master Member Bogdan G's Avatar
    Anybody using the strategy or at least testing it?

  8. #8
    Master Member vinayakm's Avatar

    How to get started? !!!

    Quote Originally Posted by Bogdan G View Post
    Anybody using the strategy or at least testing it?
    It appears to be a great strategy with a stock chart pattern that is easily identifiable even for fairly novice traders. But, I have a question in general about these profitable stock chart patterns. It is easy to pick the Euro/USD or Apple or McDonalds and check to see if they are forming a pin bar.
    But what if I am looking to get a list of stocks or forex currencies that have the pin bar shape or another high percentage winning trading strategy? Is there a way of getting this list without using expensive trading systems/machines?
    I want to use the strategy as soon as possible and I am wondering if you could give me some picks that I could get started on.
    The other thing is where do you actually get stock patterns that are illustrated with candlesticks: Is it on sites like this.
    I am talking about reputable sites.

  9. #9
    Master Member Bogdan G's Avatar
    Quote Originally Posted by vinayakm View Post
    It appears to be a great strategy with a stock chart pattern that is easily identifiable even for fairly novice traders. But, I have a question in general about these profitable stock chart patterns. It is easy to pick the Euro/USD or Apple or McDonalds and check to see if they are forming a pin bar.
    But what if I am looking to get a list of stocks or forex currencies that have the pin bar shape or another high percentage winning trading strategy? Is there a way of getting this list without using expensive trading systems/machines?
    I want to use the strategy as soon as possible and I am wondering if you could give me some picks that I could get started on.
    The other thing is where do you actually get stock patterns that are illustrated with candlesticks: Is it on sites like this.
    I am talking about reputable sites.
    Well, I mostly trade Forex and I have everything I need on the MT4 platform (also some MT4 brokers offer indices and commodities) but i guess there are plenty of sites where you can see stock charts for free. I can't recommend any, though. Anyway, remember that you don't need just the candle shape for a good trade. There are several other conditions that I talked about in the article.

    All the best
    Bogdan

  10. #10
    Senior Member Grae's Avatar
    Off the top of my head, you can use Google. They have good charts if all you need is the price points and the trend-also Bloomberg. And you don't install/pay for anything. Also you can superimpose the charts on each other. In fact google may have more than you need. Make sure to change the chart to candlesticks.

    Pretty cool. Just search the stock index to get started.

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