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 trades 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. 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 depends 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 have two other formation to take on in order to not miss a profitable move. The other two formations are the 3inside and Prominent candle, the charts pic below explains in details.
The core structure:
· Daily Chart Only… first Engulf or ( 3inside and P candle) off the Cliff/Valley on a stretched PA.
· Entry point goes a few pips above or below of High/Low's engulfed D1 candle or 3inside formations and for p candle no need for close it stop order goes right above or below one. That’s it.
· No Set SL or TP... that’s right. (100+ pips goal)
· TP exit strategy is wide open… what you see on the chart, S/R, reverse engulf, supply/demand, OB/OS etc, or simply 100 pips.
· Fakeout… looking to exit after immediate engulf against, (1 daily close candle). It has to be a major threat against the position early on. (Optional)
· Tools: 200ema/Macd… as guides to show stretched PA from congestion and serves nothing more.
· Risk per trade: 0.01% of equity, ex. $1000 acc = micro lot 0.01 lot = micro $ 0.10 cents per pip. (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. (of course this would vary from trader to trader) but some base to give you an idea.
· All 28 majors and mini indexes are all good to go.
· Chart time: 1hr or less after daily closed candle. You trade to live and not live to trade. (Recommended)
· I only make changes or any decision after daily close and none during... new orders, SL/TP changes, banking profit etc,. (Recommended)
· If active, expect to have 10 positions more or less open at all times.
· Averages about 20-30 trades per month.
. When more confluences goes along with these entry formations higher probability chances are increased, such as; DB/DT, S/R, macd Divergence, W M pattern. However, if you get hung up on too much confirmation, will result in second guessing and ultimately missing the move more often than you would like or worse yet, late entry.
. I like to also emphasize to not be all too picky about the look of the engulf if it's missing something by a hair here or there. The Idea is to see a rejection of the last strongest or prominent opposite candle engulfed for a possible reversal.
. Now, Stop right here... go to post #106 read it, then evaluate, then if you think you are up to it, continue further.
*** I also take action on pullbacks, based on same formation and the roll of the 10ema on my chart.. refer to posts, in the order 54, 80, 95 for full understanding and some of my live trades charts and commentary through out the thread.
The idea is to pick a reversal with at least one full day of data. I do not look under daily chart for my trade analysis as I consider it not reliable. I look to not settle for less than 100pips gain for 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 is massively with. 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 losses caused by sudden whiplashes, Big banks games to only take out stops, stop hunting, spread widening and other bs to be completely limited. These type of actions are a norm in this market where you could end up with breakeven results instead of many small/medium losses which adds up to a huge sum in the end. Not to mention, the constant mid losses does more psychological damage than just financial, such action will lead to more and more financial losses by throwing you completely off your whole trading plan and path.
The No stops and free flowing model is a controversial one! I know that. Therefore a very sound and reasonable money/risk management in place is the main 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 been successful with no stops style for long time as matter fact I became profitable since I dumped Stop loss. I have been in trades that gone against me in mass where with some I eat the loss at some point and others I survived with a turn around or making the losses back by profiting on the trend against and modest turn around. The high winning percentage is evident, by consistently banking normal size wins which will make up for the occasional big losses and more.. this one counter alone is good enough to plat profits.
I welcome everyone to share your trades or your thought process about setups and your insightful intelligent commentary and opinions about overall Markets, Charts, Current events etc,… but plz avoid arguments. Exchange of ideas in civil and friendly manner is what everyone appreciate and fond of.
I just ask for respect. Thx
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 come out of it better than ever as a nation and globally. Let’s make our home time a productive one socially, financially, etc,.
Learn and earn.
Nobody ever made a dime by panicking.
FxQB Return This Year: 42.3%