Novice investors are always on the lookout for a binary options trading strategy that is simple to use and yet very effective in generating rapid profits. While some strategies are more suited to more experiened traders because of their complexity, there are a few which are ideal for beginners as they require no specialist skills or advanced knowledge.
How to Identify Pinocchio Bars
One of the most popular and commonly used strategies in binary options tradings by beginners is known as the Pinocchio strategy, and its use requires the investor to be familiar with candlesticks on technical charts. Each candlestick reveals five information aspects to the trader. Its body informs the trader of the opening and closing market price of the asset, it can also inform them of the nature of the market, whether it was bearish or bullish thanks to its shading with a bearish pattern being represented by a dark body and a bullish pattern represented by a light body, while the wicks at each each of it show the lowest and highest prices for which the asset was traded during the candlestick’s time period. Once a trader can interpret candleticks effectively, they can decipher technical charts and use the information to inform their trades.
The Pinocchio strategy is a specific type of candlestick pattern, with candles that have oversized wicks paired with small bodies. Known as Pin bars of Pinocchio bars, they have been given their name because, in the same way that Pinocchio’s nose would grow in the fairy tale whenever he told a lie, the lock wick of the Pinocchio bar informs the trader that, although the market trends in a specific direction, it is in fact lying, and soon will trend in the opposite direction. At this point, experienced traders choose to place a trade against the existing trend i.e. if the long wick points down, they would place a call option, and if the long wick points up, they would trade a put option.
How to Use the Pinocchio Binary Options Trading Strategy to Trade as Risk Free as Possible
The Pinocchio binary options trading strategy is simple to apply and is a good choice for beginners who are looking for a rapid way of making money. This strategy is fairly simple as it requires only a basic market knowledge and no experience of analysing data with technical trading tools in order to get started. It is easy to spot Pinocchio candles on technical charts and this makes them ideal for executing trades that will show profit straight away.
If a trader wishes to use the Pinocchio strategy, they will need three essential components. Firstly, whenever the strategy is adopted, there must always be at least one candlestick and possibly more. Secondly, the candlestick should be strongly market i.e. be either clearly dark or white as this, thirdly, will inform the investor if the market is bullish or bearish in order to know in which direction to execute the trade.
When an investor wants to adopt the Pinocchio bar strategy into their trade, they must look for specific signals. They should look out for a Pinocchio bar which is has a very long wick, or alternatively be shadow coded so that it directs in the opposite direction of the existing trend. Once this has been observed, the trader should execute eityer a call or put option depending on the information revealed by the 3rd candle which either trends downward or upward. This 3rd candle is described as shadowing or blocking the body of the Pinocchio bar.
If you follow these steps, you should manage to achieve success when using the Pinocchio binary options trading strategy to inform your trades and generate a profit.
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