QB's Reversal Method

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.

I took two trades yesterday, pretty textbooks.
cad/jpy long
eur/cad short

Anytime there is more confluences for higher probability and confidence to take a position is great.
For example on the the two trades above I also happen to have Double Top and Bottoms too. (DT/DB)
There will be other times you would have Macd Divergence.
so engulf, DB/DT, mac div... you are golden.
I personally when have a just a engulf I take action. But when if it's on a pretty sharp trend (such as what we are seeing in current market) I tend to look for one other confluence, but when you do that you should know you risk missing the move.. sometimes its ok to be in the safe side it's a judgment call.
I took these two bcz I had the DB and DT.

Wow,this is original.

During this stretch of market turmoil I have managed to do well where I have been massively correct on some trades and massively wrong on couple. If I had just kept it simple and traded my method I would have done a killing which under normal condition i hardly ever deviate from my trading path. I passed on some obvious great signals and in couple of trades did not cut the loss when I should have. But overall doing well.

Following posts I show chart example from my ongoing trades, missed trades, miss handles and my Aces.
I think you might find it interesting and helpful if this style interests you for clarity purposes, otherwise tell me to shut up

Short on Gbp/Jpy, this is one of my Ace. I took this a little time before the chaos. I had all kinds of confluences... solid engulf of doji and the bar before, DT, mac divergence and M-formation. The full drop on this is ridiculous, 1800+ pips I am still in it at about 1300 now.
at every 400 pips drop there is a hiccup but due to magnitude of trend strength and outside factor it was easy to stay in it for more gain.
at the moment i see the strongest reversal move against it but Thursdays first bull candle against it close weak displays with huge wick same scenario with Friday close. I expect a test of the low and not a sharp reversal throughway up. I take my chances on that.
anyways this is a little about how I trade manage.

Ok, time to show my dog-s trades.. total mishandling, wrong position taking based on wrong sentiments.
If i had just kept it simple and stuck to method I would have killed it. My sentiment on Dollar was to continue getting weaker but switched it mid chaos and got back to being dollar strong therefore I end up banking 200+ pips on my original long e/u trade but to only get back on it long on the hiccup, lol where it continued the bear move and I still have kept the one long costing me big time, instead as I show in the blue box I had the perfect engulf signal to go short and be in zillions of profit atm. Same on A/U trade (This entry is not based on engulf) where I kept it and can not believe how AUD is getting hammered across the board. But to offset this one I took short on aud/cad with all kinds of confluences only missing stretched PA but not in a congested situation and its doing great in profit.
The point and main lesson here is to stick to game plan and not to deviate no matter what. For most part I have but as soon as I deviated a bit and let predictions creep in it held me to really doing a killing.

What you will get with me in this thread is transparency. Having a solid system, method, trading plan, model or whatever you want to name it is one thing and to actually be successful and more importantly Profitable in consistent basis is another thing. Therefore, as a presenter everything got to be openly on the table to not waste anyone's time and avoid false confidence build up.
Financial market market trading is too vast to put a cap on. It can not be all too systematic but it requires some core structure as a base to follow and then within that path flexibility and adaptability is vital to achieve full potential. That is why I let go of trading with stop-loss but to replace it with solid Money management and defense mechanism tactics to avoid disaster.
Anyways we talk more about these topics if the thread has enough interests.

Gbp/Chf short sometime before the pandemic. Its my other Ace along with g/u and g/j all success due to super weak pound.
On this one I did not have the stretched PA that I like to have but I had everything else such as, engulf, DT, Divergence and the good ol head and shoulder pattern (I am not a pattern guy by the way) but it's reliable when if is there with everything else in place.
results a whooping 1500+ drop currently at 1200+ pips profit. At 400+ there was a solid bull candle but I decided to keep for another day see what happens which it resumed nicely.

engulfing pattern is very reliable trading trigger. it means buyers or sellers are taking over for that particular timeframe and direction the market is going.

Based on my analysis regards to current stage (Pandemic duration) of each major currencies strength and weakness as follows;

The Weakest
· AUD… Weak across the board.
· GBP… Weak against USD, EUR, JPY, CHF, not on AUD & NZD.
· NZD… Weak across the board but slightly not against GBP & AUD.

The Strongest
· UDS… Strong across the board.
· CHF… Strong across the board with exception of USD and neutral on JPY
· JPY… Strong across the board with exception of UDS and neutral on CHF & EUR

Neutral Currencies:
· EUR… Strong against GBP,AUS, NZD.. Weak against USD, CHF and Neutral PY, CAD
· CAD… Strong against GBP, AUD, NZD.. Weak against USD, EUR, JPY, chf

What stands out to me is how depleted the GBP and AUD got more than anything, unbelievably crazy.. they got hammered and holding it still.

I hope it helps as some kind of an insight for upcoming week of trading. We saw some kind of a halt from sharp market drop later stages of past week that is why we see in most currencies a mild pullback in respect to current trend, I would not called it a reversal or even a reversal sign just yet but who knows.
I personally think until there is no positive medical drug development for this monster the current trend will either continue or stay stagnant.
Remains to be seen.

Thanks for your reply.
I only find it reliable on higher time frame such as Daily+... 4hr and hourly not as much for consistent results... under hourly simply forget about it.

Good thread QB, but I see from some of your pics above that some of these patterns are NOT engulfing patterns, dark cloud cover or whatever. I'm not picking at you just stating facts. I really do admire your trading style and wish you all the best.
I do trade much the same and also use the outside bar engulf patterns.
Note the fast period moving average on your chart displays confluence with the engulfing patterns and if you did drop back (something for others to follow) one time frame to the four hour chart and take all engulf patterns from the 4hr chart, in the direction of the daily, you can pick up some very nice trades.
Just my view, and all the best QB.

Thanks for your reply and kind words pet.
I welcome all comments brother no worries. The AUD/USD trade is defiantly not and I mentioned it's not, that one was just a dumb trade, lol what can I say.
But rest of them for the most part they are and I am happy you brought it up. The engulf to me is either a textbook one like the CAD/JPY long trade for example.. or, but also for eg. a solid bear candle that engulfs the previous 2 bull candle due to their smaller size or even cross closing of previously strong bull candle. Example of such is my GBP/CHF trade chart where the highlighted bear candle finally engulfs the top bull candle.
if not clear I can show in charts... but I think you are experienced enough of a trader to get my drift.

Hi! I don't understand what you mean when you say first Engulf off the Cliff/Valley on a stretched PA.

Because on your screenshot there are not engulfing pattern

he is referring the cliff as the high and the valley as the low. See the charts posted to understand the high point to where an engulfing bearish patterns at the cliff or an engulfing bullish pattern at the valley.
Hope this helps mate

Hi buddy... the chart explanation should help.

Thanks buddy.

About the 2nd part of your post. I use the fast moving avg for trend trades off the pullback. But I would reveal that in later stage of the thread if it gets there. I understand what you suggest as well and it should be a good one.
thx

just for correction, it looks as though that fast moving average could be around 10ema.