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(binned per thread starter’s request) The Engulf Method

  • #21
  • Feb 2, 2014 5:14am Feb 2, 2014 5:14am
Quoting Winston Reed
CADJPY. Trade I took during Asian yesterday and closed today. I took the bounce at the first red arrow. Closed at swing low. My trade explorer verifies the trade. {image}
Hi Winston,

Good to see you starting your own thread, good luck with it.

I was looking at CAD/JPY, do you look for major SR on the higher TFs to see how it influences the TF you are trading?
Attached Image(s) (click to enlarge)
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  • #22
  • Feb 2, 2014 5:24am Feb 2, 2014 5:24am
Sound methodology.
It's just s/d trading on breakout retracements, pure Seiden etc.

A clearer way of viewing: helps visualisation of strong breaks from consolidation areas: will help you marry the chart TF's up better too. Don't forget that the chart time periods are just what's in the platform though. 3 to 5 daily up bars in a row breakout out of an area are showing the the same information as an engulf on the weekly, whereas the weekly may fool you with a strong down on Friday (say). Think about the move from the breakout and quickly and how far it's moved rather than just a bar on a chart.

Only thing I'd add is: forget about 'trend'. Even if you are seeing weekly engulfs up you have to determine when it's no longer cheap enough to buy in the bigger picture, unless your plan is just punting and not trying to build larger positions from smaller risk.

Trading the weekly engulf OK, but know where the monthly highs or all time highs are too: know where the upside potential lies: putting it simply, if a currency has never been below the area of 1.3 to 1.4, not EVER but price is 'trending down' in that zone and you see an engulf up, where does the potential lie - up or down?

Large charts can equal maximum lotsize for long holds for minimum risk.
  • #23
  • Feb 2, 2014 5:29am Feb 2, 2014 5:29am
Quoting Winston Reed
EURGBP. Weekly in down trend. H4 levels as marked. Red arrow shows a hit. {image}{image}
Finding the major SR levels can keep you on the right side.
Attached Image (click to enlarge)
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  • #24
  • Feb 2, 2014 9:46am Feb 2, 2014 9:46am
Quoting nunrgguy
Sound methodology. It's just s/d trading on breakout retracements, pure Seiden etc. A clearer way of viewing: helps visualisation of strong breaks from consolidation areas: will help you marry the chart TF's up better too. Don't forget that the chart time periods are just what's in the platform though. 3 to 5 daily up bars in a row breakout out of an area are showing the the same information as an engulf on the weekly, whereas the weekly may fool you with a strong down on Friday (say). Think about the move from the breakout and quickly and how far...
Hey nunrgguy,
Thanks for your post and please don't take offense to what I have to say. First and foremost this is NOT s/d trading ala Seiden or anyone else although there are similariities. Every Tom, Dick and Harry has a s/d thread now and many of them are pawning what they think is the ultimate trading style in the commercial section. This method IS about trading with the weekly "trend" and weekly engulfs although the weekly engulf will often be against the overall main weekly trend. We will not forget about the trend in this thread. This thread also will concentrate on the weekly/h4 combination. I do not want to get into trading 1min, 5min, 15 min or anytime frame under H1. Sometimes I take trades off the H1 time frame but my analysis absolutely occurs on the weeklH4 time frame. You sound like you have some very good knowledge and ideas about a method you are comfortable with but it is not what I am teaching here. So I suggest you open your own thread. However is you want to contribute towards the ideas and methods of this thread please do.

Take care,
Winston
  • #25
  • Feb 2, 2014 9:54am Feb 2, 2014 9:54am
Quoting Direwolf
{quote} Hi Winston. I'm curious about trade #1. You said you enter after the bar closes and I assume your target is the line drawn? In that case wouldn't you get RR lower than 1? I mean, for Engulfing Bar I assume the SL would be above the bar right?

Hello Direwolf,
I dont obsess over r:r which I think is way over-done in these forums. I just look for good trades based on the methodology here. Once you have entered a trade and are in profit you need to move your stops to protect your profit. Then as the trade moves along use a trailing stop or move the SL to the next high/low of the H4 candle and let the trade run. If you do you will have some trades that get stopped early and some that will run for impressive R:Rs. In that trade I actually took it on the H1 chart and I mentioned this in my journal thread so my entry was sooner. My profit was 60+ pips on that trade. (see my journal where I document every trade) However not knowing what was going to happen after the close of the H4 that would have been a good trade anyway.

One other thing here is we don't take "touch" trades as many do in the supply/demand threads and we don't mark-up every single s/r, s/d level on our charts like many s/d traders do. Just the closest and most obvious s/r area/s.
  • #26
  • Feb 2, 2014 10:06am Feb 2, 2014 10:06am
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Quoting stevepatt
{quote} Hi Winston, Good to see you starting your own thread, good luck with it. I was looking at CAD/JPY, do you look for major SR on the higher TFs to see how it influences the TF you are trading? {image} {image} {image}

Hey Steve! No I don't pay to much attention to s/r as you describe although there is nothing wrong with noticing these. I am more interested in the s/r areas left behind by the recent weekly engulfing candles. The breakout of the box on the left would likely have had many playable levels on the H4 chart but these have played out in the past.
  • #27
  • Feb 2, 2014 10:43am Feb 2, 2014 10:43am
Quoting Winston Reed
{quote} Hey nunrgguy, Thanks for your post and please don't take offense to what I have to say. First and foremost this is NOT s/d trading ala Seiden or anyone else although there are similariities. Every Tom, Dick and Harry has a s/d thread now and many of them are pawning what they think is the ultimate trading style in the commercial section. This method IS about trading with the weekly "trend" and weekly engulfs although the weekly engulf will often be against the overall main weekly trend. We will not forget about the trend in this thread....

You've not understood a word of what I've typed.
What on earth do you think a weekly engulfing bar looks like on a daily or H4 chart?

You're buying or selling a 75% retracement. Well done.

The shape of individual price bars is irrelevant. There is nothing special about ANY price bar. You're just locking yourself into the same timeframe misery everyone else does. What is special about hourly daily, H4, weekly, charts and the open, high, low and close any one bar shows? NOTHING. The market is not a digital entity that conforms to digital time slices as set by your broker/platform. It's all illusory.


There is no trend, truly there isn't all you need to do is look to an even higher TF chart to see this. Price is ALWAYS moving between supply and demand levels, always. Your only concern is how large a chart you are intending to position from.

As for being derisory about other s/d threads - you are doing nothing different, absolutely nothing.

Good luck with it anyway: you're on the right track.
  • #28
  • Feb 2, 2014 11:02am Feb 2, 2014 11:02am
Quoting nunrgguy
{quote} You've not understood a word of what I've typed. What on earth do you think a weekly engulfing bar looks like on a daily or H4 chart? You're buying or selling a 75% retracement. Well done. The shape of individual price bars is irrelevant. There is nothing special about ANY price bar. You're just locking yourself into the same timeframe misery everyone else does. What is special about hourly daily, H4, weekly, charts and the open, high, low and close any one bar shows? NOTHING. The market is not a digital entity that conforms to digital...

I really did understand completely everything you said. YOU do not understand the time and effort I have put forth coming to the conclusions I have that have led to the development of this method. I'm not interested in arguing with you or anyone else about your perceived limitations of this method. I have very specific reasons for choosing the time frames and the engulfing nature of the candles as an integral part of my trading style. Largely it has to do with my own time limitations. I've been trading long enough to know what my limitations are whether they be a choice of time frames or the shape of the candles. I have been down the supply and demand road already having been an active member of one on-line forum/community and a devout follower of Redsword11 (PIE thread) at one time. So I am completely and well versed in the supply and demand trading methodology. As I said before you obviously are quiet confident with your knowledge and trading and I applaud you for that. But please leave your criticism and your sarcastic funny laughing figures out of my thread.
  • #29
  • Feb 2, 2014 11:06am Feb 2, 2014 11:06am
Quoting Winston Reed
{quote} I really did understand completely everything you said. YOU do not understand the time and effort I have put forth coming to the conclusions I have that have led to the development of this method. I'm not interested in arguing with you or anyone else about your perceived limitations of this method. I have very specific reasons for choosing the time frames and the engulfing nature of the candles as an integral part of my trading style. Largely it has to do with my own time limitations. I've been trading long enough to know what my limitations...
I think what he is trying to say/ask is whether or not it matters if the weekly engulfing is made up of several breakout candles in the same direction (breaking out of a consolidation zone/previous highs or lows) or just price reversing on Friday closing it as an engulfing.
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  • #30
  • Feb 2, 2014 11:08am Feb 2, 2014 11:08am
Quoting shellsnail
{quote} I think what he is trying to say/ask is whether or not it matters if the weekly engulfing is made up of several breakout candles in the same direction (breaking out of a consolidation zone/previous highs or lows) or just price reversing on Friday closing it as an engulfing.

Hey shellsnail. I really do understand what he is saying. Let's leave it at that and move on. Thanks!
  • #31
  • Feb 2, 2014 11:09am Feb 2, 2014 11:09am
Quoting Winston Reed
{quote} Hey shellsnail. I really do understand what he is saying. Let's leave it at that and move on. Thanks!
So I am assuming it doesn't matter? genuine question.
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  • #32
  • Feb 2, 2014 11:11am Feb 2, 2014 11:11am
Quoting shellsnail
{quote} So I am assuming it doesn't matter? genuine question.

You are correct. It doesn't matter in the context of the way I am trading. In the context of true s/d trading as taught elsewhere it probably does. You can check those threads. There are several of them.
  • #33
  • Feb 2, 2014 11:12am Feb 2, 2014 11:12am
Quoting Winston Reed
{quote} You are correct. It doesn't matter in the context of the way I am trading. In the context of true s/d trading as taught elsewhere it probably does. You can check those threads. There are several of them.
Ok thanks!
Build good relationships with others.
  • #34
  • Feb 2, 2014 11:30am Feb 2, 2014 11:30am
When I scan the weekly charts I look for charts where price has broken away from consolidation or ranging patterns. I will stop trading the pair when an engulfing occurs in the opposite direction. After a trend price often ranges before moving on. We want to trade after the breakout of the range. At least in this method. An impressive engulf however even if it is against the overall weekly trend may be tradeable on the retraces as seen on the H4 charts. As time and charts develop I hope to instill more clearly which charts I consider tradeable. Attached is an over-simplification of how I look weekly charts.
Attached Image (click to enlarge)
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  • #35
  • Feb 2, 2014 1:37pm Feb 2, 2014 1:37pm
The below statement has been added to the first page.

2/2/2014: Sadly I have to post some rules because one individual felt it necessary to crap here. I have submitted a cleanup to the administrators as I really want to run a clean thread. This thread is about my method as posted in the PDF and in subsequent posts. There are a thousand ways to trade. This is just one way. It may not be the most profitable way to trade and I'm okay with that. What is important is that this method currently works for me as it is. This is not to say I am not open to constructive criticism or suggestions. But tread carefully. If you are posting to hear yourself preach then don't.

Rules for participation in this thread:
1. No indicators
2. If you think you know it all then open your own thread and vomit your knowledge on your own thread.
3. No sarcasm or ridiculing - no second chances. You will be banned.
  • #36
  • Feb 2, 2014 1:43pm Feb 2, 2014 1:43pm
Winston you got a watch list for this week? Gold weekly?
tradewith60
  • #37
  • Feb 2, 2014 1:56pm Feb 2, 2014 1:56pm
Quoting 60minuteman
Winston you got a watch list for this week? Gold weekly?
This is my Gold chart. Although weekly candle has engulfed south a bit it really doesn't impress me so much. I won't be trading it. This is my wathc list right now but I'm scanning up until the open of the market today so I may add some more.
Attached Image (click to enlarge)
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  • #38
  • Feb 2, 2014 2:14pm Feb 2, 2014 2:14pm
Well I am in.....albeit only small quids
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  • #39
  • Feb 2, 2014 2:19pm Feb 2, 2014 2:19pm
Quoting Tedge UK
Well I am in.....albeit only small quids {image}

Good luck Tedge. Maybe you can offer some explanation for your entry. Was it the weekly engulf?
  • #40
  • Feb 2, 2014 2:26pm Feb 2, 2014 2:26pm
Quoting Winston Reed
{quote} Good luck Tedge. Maybe you can offer some explanation for your entry. Was it the weekly engulf?
Thanks Winston,I see resistance that was once support plus coming off trend channel with good momentum Engulfing enough for me to trade it,as I said tho with small lots
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