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Pinocchio Strategy is a trading system based on signals of the same name indicator. The objectives of this trading system include the optimal selection and determination of methods for controlling risks and closing deals. The signals by which deals will be opened are ready-made signals of the Pinocchio indicator configured to work with the EURUSD currency pair on the H1 timeframe.
You can download the Pinocchio indicator for FREE in the Indicators section on our website.
Indicator settings
Applying the Pinocchio indicator to the EURUSD currency pair on the H1 timeframe, set the following values in the input parameters:
- Set "Pinocchio Body Percentage" to 50.
- Set "Pinocchio Extremum" to "1 Day".
- Parameter "Largest Pinocchio Among" set to 18.
All indicated values are individual parameters for the EURUSD currency pair in this strategy and are considered optimal values in this context.
Conditions for opening short positions
In this system, there is no data for the interpretation of signals by the trader. All signals have already been calculated by the indicator automatically, and when they occur, notify the user by displaying a mark on the graph and a sound signal. Thus, in order to open a short position, wait for the signal from the indicator to appear, which will appear on the chart in the form of a red mark and notify you of this with a sound signal.
A red label indicating a call to sell will be displayed on the last closed candle. When this event occurs, on the next new candle opens a SELL deal. Immediately after opening a trade, put a stop loss in the place where the red mark is displayed. After setting the stop-loss, calculate the distance from the deal opening price to this stop-loss. Use the obtained value to set the trailing stop, as shown in the example.
In case of an unsuccessful trade, it will be closed by stop loss. When the price moves in the direction indicated by your deal, profit-taking with the help of a trailing stop will give a profit at least equal to the potential risk, and at the maximum several times higher than the potential risk.
Conditions for opening long positions
Do the same actions when a buy signal appears, which is reflected in the form of an audio signal of a green mark on the price chart.
Conclusion
As you can see from the description, Pinocchio's strategy is a simple and lightweight system that is suitable even for beginners. All major transaction decisions here are assigned to the Pinocchio indicator. The system's tasks include only risk control and exit methods from deals. In the considered example, this system is applied to the EURUSD currency pair. But the indicator itself is a universal tool, and choosing the optimal parameters for other trading assets, you can successfully apply the Pinocchio strategy to them. Using this or any other system in your trading, never forget about competent money management corresponding to your deposit.
