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Buy/Sell Line for Daily Chart

  • #21
  • Apr 1, 2013 11:13am Apr 1, 2013 11:13am
Hi Wend... you're on the right track here, there's so much I could add in the way of ideas and tips that it might be more of a hinderance than a help, So, I will try and give some very simple clues to get you in the more profitable ball park...

what actually is an engulf on the daily TF? what does it signify?

Well an engulf is a breakout, price is breaking out of a consolidation or a trend and closing over the S/R on that tf. This tells us something really important, it tells us that price will continue to an S/R line on a HIGHER tf. (in this case the weekly tf). Have a look, pull up a chart, look for an engulf on daily, mark the lowest low or high of that move... it will be a weekly or higher tf S/R line (or maybe a monthly!)

So an engulf is not just a candle pattern, it is how price moves, without the engulf price would always go in the same direction or sideways..... (there's engulf's in disguise too, you need to learn them also..)

Price moves from point A to point B by a flow of engulfs up the times-frames from the lowest to the highest so we can track the future movement of price precisely by using these 'signposts'... A better way of describing it may be to say 'When a weekly downtrend ends the m5 will engulf against it first'.

ok, enough on that... there's the holy grail in that already... thats real price action and real S/R...

So knowing that an excellent way of trading daily engulf is (if this is possible for you time wise)... wait for a daily engulf, let price retrace, trade the next h4 or h1 engulf in the same direction. You instantly increase your reward and greatly reduce your risk, if the daily bar retraces (which it will 8 or 9 times out of 10)there has to be an engulf on the lower tf for the move to continue.

hope that might help somehow...
tradewith60
  • #22
  • Apr 1, 2013 11:20am Apr 1, 2013 11:20am
here's a pic to help...

Gu Daily engulfs, dropped to h4 for precise entry... there will always be one!!! which makes life much more simple

(second long is what i call an engulf in disguise, requires 2 candles to close over the sr instead of 1, its meaning with regards s/r and price action is exactly the same)

CHARTS: DAILY, H4, LONG TRADE ON H4
Attached Image(s) (click to enlarge)
Click to Enlarge Name: daily.png Size: 22 KB
Click to Enlarge Name: h4.png Size: 42 KB
Click to Enlarge Name: Screen shot 2013-04-01 at 19.19.00.png Size: 13 KB
tradewith60
  • #23
  • Apr 1, 2013 12:59pm Apr 1, 2013 12:59pm
Quoting 60minuteman
here's a pic to help... Gu Daily engulfs, dropped to h4 for precise entry... there will always be one!!! which makes life much more simple (second long is what i call an engulf in disguise, requires 2 candles to close over the sr instead of 1, its meaning with regards s/r and price action is exactly the same)
Hi 60minuteman, thanks for the input! I wish I had the time to even trade the 4 hour charts but for me that would be pushing it. I would love to enter on those lower time frames though. Please feel free to post here anytime!
  • #24
  • Apr 1, 2013 2:40pm Apr 1, 2013 2:40pm
Quoting Wendavol
Hi 60minuteman, thanks for the input! I wish I had the time to even trade the 4 hour charts but for me that would be pushing it. I would love to enter on those lower time frames though. Please feel free to post here anytime!
ok fella... but like I said, this is how price moves on all timeframes, so if you need to enter on daily, look for weekly to give you the nod...

EU daily engulf down this week would be an A++ set up... if you cant see what I mean I will do you a pic
tradewith60
  • #25
  • Apr 1, 2013 4:47pm Apr 1, 2013 4:47pm
Quoting 60minuteman
ok fella... but like I said, this is how price moves on all timeframes, so if you need to enter on daily, look for weekly to give you the nod... EU daily engulf down this week would be an A++ set up... if you cant see what I mean I will do you a pic
Thanks, I think I get what you mean. So in my case, I would look for buy/sell line set-ups on the weekly (above/below 50sma and engulfing or type 2 price action) and then wait for the daily chart to show an engulfing or type 2 set-up for my entry?
  • #26
  • Apr 1, 2013 5:32pm Apr 1, 2013 5:32pm
Quoting Wendavol
Thanks, I think I get what you mean. So in my case, I would look for buy/sell line set-ups on the weekly (above/below 50sma and engulfing or type 2 price action) and then wait for the daily chart to show an engulfing or type 2 set-up for my entry?
yes, it means you will be taking the trades with the best reward potential, you will in effect be trading the weekly tf but it will only be costing you daily tf risk
tradewith60
  • #27
  • Apr 1, 2013 5:58pm Apr 1, 2013 5:58pm
here's an example, a current long on h4, once h4 engulfed I went to M15 and took the first engulf long and was able to get very small risk for the potential rewards..

as I said this works on all timeframes, its how price moves..

anyway I don't want to hi-jack your thread Wend... just some ideas that do work and may help..


good trading to you mate....
Attached Image (click to enlarge)
Click to Enlarge Name: Screen shot 2013-04-02 at 01.54.56.png Size: 36 KB
tradewith60
  • #28
  • Apr 2, 2013 9:12am Apr 2, 2013 9:12am
Wendavol, 60MinuteMan -

I'm ready to revise the ea program to include engulfing candles on a higher timeframe, not a problem. Would you provide a concise definition of an engulfing candle? Viewing the attached charts, several of the highlighted candles do not fall within my understanding of bullish/bearish engulfing candles, hence my question.

Also, Wendavol, I encourage you to backtest the current ea and start with Jan 1, 2013 through today. Verify that the results match your manual test. If not, compare your IronFX data file to the data file on your MT4 platform (which broker?) to find possible differences.
  • #29
  • Apr 2, 2013 5:47pm Apr 2, 2013 5:47pm
here is an indicator I use called Inside Outside. It draws blue arrows on the chart for inside candles and green arrows for outside candles. The definition I use for outside days is today's high > greater than yesterday's high and today's low is less than yesterday's low. Sundays are excluded.

Another definition for bullish outside days is today's open is less than yesterday's close and today's close is greater than yesterday's open. This is comparing the body of the two candles rather than the range. If you prefer this, it is easy enough to make that change.

Hope this helps.
C


Attached File(s)
File Type: mq4 Inside Outside.mq4   6 KB | 483 downloads
  • #30
  • Apr 2, 2013 6:27pm Apr 2, 2013 6:27pm
Here is my results file for March 2012 to today, starting with your Mar 1, 2012 balance of 6,186. $1,244 net

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot3.png Size: 57 KB
  • #31
  • Apr 2, 2013 7:25pm Apr 2, 2013 7:25pm
Quoting cballew
Wendavol, 60MinuteMan - I'm ready to revise the ea program to include engulfing candles on a higher timeframe, not a problem. Would you provide a concise definition of an engulfing candle? Viewing the attached charts, several of the highlighted candles do not fall within my understanding of bullish/bearish engulfing candles, hence my question. Also, Wendavol, I encourage you to backtest the current ea and start with Jan 1, 2013 through today. Verify that the results match your manual test. If not, compare your IronFX data file to the data file on...
My data must be bad, it froze again and had over 3,000 mismatched chart errors. Maybe we should just stick with manual backtesting?
  • #32
  • Apr 2, 2013 7:36pm Apr 2, 2013 7:36pm
Quoting cballew
Wendavol, 60MinuteMan - I'm ready to revise the ea program to include engulfing candles on a higher timeframe, not a problem. Would you provide a concise definition of an engulfing candle? Viewing the attached charts, several of the highlighted candles do not fall within my understanding of bullish/bearish engulfing candles, hence my question.
Here is a link to one of Steve Primo's webinars in which he explains his definition of the engulfing pattern:

http://www.fxstreet.com/webinars/ses...a-7b44ff944b3a

Some others use the definition of engulfing as a candle which has both a lower low and a higher high than the previous candle. In this thread, I am using Steve Primo's definition.
  • #33
  • Apr 2, 2013 11:06pm Apr 2, 2013 11:06pm
Quoting Wendavol
My data must be bad, it froze again and had over 3,000 mismatched chart errors. Maybe we should just stick with manual backtesting?
The mismatched errors are not EA errors but datas errors.
MT4/MT5 EAs/Indicators/Alerts coder
  • #34
  • Apr 3, 2013 2:54am Apr 3, 2013 2:54am
Quoting cballew
Here is my results file for March 2012 to today, starting with your Mar 1, 2012 balance of 6,186. $1,244 net {image}
I promise you 100% if you want to design an EA to trade this it will not be simple, just because the criteria for trading is simple for the human brain there is way more discretion used than you would ever believe.... but good luck anyway, also I dont see the point on daily charts, a few minutes at the charts your brain will be able to make much more accurate decisions on entry and exit that you could ever program. just my opinion
tradewith60
  • #35
  • Edited 5:06am Apr 3, 2013 4:55am | Edited 5:06am
Quoting 60minuteman
Hi Wend... you're on the right track here, there's so much I could add in the way of ideas and tips that it might be more of a hinderance than a help, So, I will try and give some very simple clues to get you in the more profitable ball park... what actually is an engulf on the daily TF? what does it signify? Well an engulf is a breakout, price is breaking out of a consolidation or a trend and closing over the S/R on that tf. This tells us something really important, it tells us that price will continue to an S/R line on a HIGHER tf. (in this case...
Nice explanation and very simple method. Many thanks, I'll definitely give it a try.
Do we need to take into consideration the 50 MA too?
In your method the engulfing bar has to engulf either the High and the Low or is enough to close above/below the High/Low?
  • #36
  • Apr 3, 2013 5:04am Apr 3, 2013 5:04am
In the examples below, which one you'd have traded?
The 1st didn't engulf the high (is a valid one?) and is above the 50 MA
The 2nd engulfed both high and low and is below the 50 MA

EUR/USD daily

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd.png Size: 47 KB
  • #37
  • Apr 3, 2013 5:04am Apr 3, 2013 5:04am
Quoting lucariga
Nice explanation. Do we need to take into consideration the 50 MA too? In your method the engulfing bar has to engulf either the High and the Low or is enough to close above/below the High/Low?
The 50ma is a great visual indicator of the trend on that TF, when price is stretched away from it it will make a move back to it and vice versa when the price hits it it will often break away....

The important part about an engulf is not the exact pattern of bars/candles, it is the fact that price was moving in one direction and then it hit a higher tf s/r line and price turned and closed over the s/r on its own tf... heres a picture of 2 charts, both indicate the exact same thing with regards price action and future movement..
Attached Image (click to enlarge)
Click to Enlarge Name: Screen shot 2013-04-03 at 13.02.58.png Size: 21 KB
tradewith60
  • #38
  • Apr 4, 2013 9:03am Apr 4, 2013 9:03am
Here is a revised indicator file for inside, outside bars. The outside/engulfing calculation now matches Steve Primo's method; ignoring the most recent bar's high & low.

Attached File(s)
File Type: mq4 Inside Outside.mq4   5 KB | 431 downloads
  • #39
  • Apr 4, 2013 5:25pm Apr 4, 2013 5:25pm
posting a correction to this indicator file: Inside Outside.

Please disregard last uploaded version.

Attached File(s)
File Type: mq4 Inside Outside.mq4   5 KB | 521 downloads
  • #40
  • Apr 10, 2013 6:15pm Apr 10, 2013 6:15pm
Can know what is the test result for H4 vs Daily candle? and best result with which currency pair? Thank you.
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