QB’s Reversal
(P-Candle)
(Engulf)
Hello to all,
I get right to the trading plan first, and then if you choose to you may read the rest of the post.
This is a reversal swing trading style where positions could last from a day to weeks, it all depends on markets condition. The lucrative part is to not limit the max potential gains and I am all about that. This style is not for everyone nor popular! But it is a profitable one, veterans may concur with me. The technical part of this method is not complicated at all, its simple to spot the setup. To profit from it fully, will/may take time and practice. That is why this thread is here, I am here and hopefully, other experience like-minded traders will join to guide you all through.
Engulf is basically a Reversal pattern and the core formation in-use here, by using the daily chart as a reliable TF to go by to spot reversal moves or at very least pullbacks large enough to profit from. You may see lots of engulfs in one particular chart, but the winners/higher probability ones depend on Where, When, and How you take action on. So this thread will help to show that based on the info below and hands-on live trading.
In the case of no engulf shaping as the go-to formation here I the real my go-to formation which is called the P-Candle = Prominent Candle. The charts pic below explains in detail.
The core structure:
* Daily Chart Only; Engulf or P-candle off the swing High or Low (Cliff/Valley) on a stretched PA.
* Entry point: Engulf; a few pips above/below of High/Low price... on the candles with longer wick going off the closed price.
P-Candle; a few pips from the open price.
*No Stop Loss.
* Fake out; give yourself 300-500 pips breathing room to either survive for break-even or exiting at some point for a loss, all on your terms as the way you see the PA and not to be forced out of the position by a set SL.
* TP exit strategy is wide open; you can bank based on what you see on the chart, S/R levels, reverse engulf, supply/demand, OB/OS, etc, but you don't want to settle for a small gain, I shoot for the moon, however, a 100+ as a mental goal is in back of my mind.
* Tools: Your two sets of eyes and a couple of horizontal lines will do, rest is noise.
A little use of MACD for divergence gauge. MA's on my chart are none use really, 200ema for quick notion overall trend and 10ema for shorter. I don't have it on my chart most of the time.
Risk:
* Risk per trade: 0.01% of equity, ex. $1000 = 1 micro lot (0.01) = 10 cents per pip move. (Highly recommended for newbies) Vets can adjust on their own based on comfort level. I have never gone over 0.1% which is the max ever I recommend.. 0.05% for a confident trader with decent size account is lucrative and safe still.
* The return expectation on bear minimum risk I suggested above is about 2-3% a wk, 8-12% mo. If you are an experienced trader and trading at .05% risk then you can multiply those numbers by five, so 50% mo is pretty damn good, trust me.
Notes:
* Pairs: All 28 majors, mini indexes are all good to go. I do not trade the following pairs due to super-high spread: gbp/nzd.eur/nzd.gbp/aud.gbp/cad- eur/aud.nzd/cad and eur/chf, bcz of low volatility other me just not liking it, lol.
* Chart time: 1hr or less after the close of the daily candle. You trade to live and not live to trade. (Recommended)
* I make changes or any decisions ONLY after daily close and hardly during. (new orders, SL/TP changes, banking profit, etc,.) (Recommended)
* If active, expect to have an average of 15 positions open at all times.
* Averages about 20-30 trades per month.
* When more confluences alongside the entry formations, the higher the probability, confluences such as; DB/DT, S/R, W M pattern, etc, However, if you get hung up on too many confirmations, it will result in second-guessing and ultimately missing moves more often than you would like or worse yet, late entry.
* When to place your orders; The 2nd hour of D1 open due to high spread, it settles within one hour... so use the 1st hr to study the charts mark the possible signals.
* Do not leave a pending order over the weekend. Market gaps will trigger you in odd spots and not preferred. (very important)
* I like to also emphasize not be all too picky about the looks of the engulf, if it's missing to be a textbook one by a hair here or there no worries, as long as the Body to Body is a strong one. The Idea is to see a rejection of the last strongest or Prominent candle wiped and covered for a possible reversal.
Now, Stop right here... go to post #106 read it, evaluate, then if you think you are up to it, continue further. (it's about No SL approach)
Now, the idea is to pick a reversal with at least one full day of data. I do not look under the daily chart for my trade analysis as I consider it not reliable. I look to not settle for less than 100pips gain, for the most part, I fight for that. However, there are times you will settle for less or more, both ways. The RR obviously looks to be against but the Profit factor in favor by mass. Plotting high win percentage is the trade-off for the occasional large loss. Also, such an approach will have you fall into large wins as well, 300+ gains. It’s evident that trades will be given enough time and breathing room to fall into profit or to truly reveal as a definite loser. Taking losses based on deceives and not the true intentions of Price is what I intend to avoid. Such stops hit is caused by sudden whiplashes, Big banks games, stop hunting, spread widening, and other bs. These types of actions are a norm in this market where you could end up with breakeven results instead of many small/medium losses which add up to a huge sum in the end. The constant stop hits do more damage than just financial ding, the real damage is the psychological one, which is like a can of a worm, to lead to all sorts of problems.
The No Stop free-flowing model is a controversial one! I know that. Therefore a very sound and reasonable money/risk management in place is an essential factor of succeeding in such approach. Your pain threshold must be high otherwise don't even bother with this style. When and if the thread evolves I am sure there will be all kinds of discussion in this regard which I intend to engage in for more clarity with live-action behind it. I have a live TE attached as well mostly for this purpose. I have been successful with no stops style for a long time as a matter of fact I became profitable since I dumped Stop loss. I have been in trades that go against me in mass to only survive it at breakeven most times instead of constant stop hits, and sure occasional large losses are evident (300-500 pips) but accounted for.
I welcome everyone to share your trades or your thought process about setups and your insightful commentary, opinions about the overall Markets, Charts, Current events, etc,… but plz avoid arguments. Exchange of ideas in a civil and friendly manner is what everyone appreciates and fond of.
I just ask for respect. Thx... and no commercial posts, please.
Let’s have fun… it’s tough and difficult times for us all based on what’s happening in the world where 5% daily market drop is a norm and new cases at exponential rate scary. With that said, still got to have fate, I am an optimist and believe we will beat this to only come out of it better before as a nation.
let's learn and earn.
God bless.
Nobody ever made a dime by panicking. Jim C