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00:00Engulfing 101. Let's go!
00:08Okay, today we're going to talk about how engulfing method works.
00:12There are rules when you have to apply engulfing methodologies.
00:17Okay, two simple rules.
00:19Number one, you got to observe the trend.
00:22It must be in a trend.
00:24Number two, the engulfing candle must be more than 50% from the previous candle.
00:32Meaning, it must makan the previous candle more than 50% to qualify it as an engulfing candle.
00:41And then, next step, where do you keep it?
00:44We can monitor the stochastic chart to estimate where we can keep it.
00:48The example given later on the charts will be a bearish engulfing
00:52and we will see where we can take our profit.
00:55Now, on this chart, you can see price is pretty much consolidating.
01:01So, what we can do here now is to just wait for trend to form.
01:06Once we can confirm that a trend has already been formed,
01:09then we can only look out for the engulfing candle for us to enter the trade.
01:15It's played up and we're going to see where is the best place for us to enter the engulfing candle.
01:24Now, we have to wait because using engulfing strategy,
01:31the only way is for us to spot an engulfing pattern.
01:36And when we spot those two candles, only then we can enter.
01:41There's no other way, no other strategies that we can make that match into this strategy.
01:45You just have to wait it out.
01:48Now, we can see that price is consolidating and already form a downtrend.
01:51We can confirm that this is a downtrend that is happening.
01:56Now, we can spot one bearish engulfing over there.
02:01So, let me zoom it in for you and you can see clearer over there.
02:05It looks like a doji and then the next candle is a bearish candle.
02:10There we go, that's the one.
02:12Definitely more than 50%.
02:16We are in the 15 minutes time chart.
02:18It is in a trend.
02:19So, place the bill.
02:21We're going to put a sell button over there at lot 1.0.
02:26It says there 10 but based on the calculation from trading view and the decimal points,
02:31it is 10.
02:33That's actually 1.0.
02:35So, now we can see that we are already running profit
02:38based on the entry that we have made on engulfing, lot 1.0.
02:46Now, where do we put our stop loss?
02:49We have to put it on the previous high.
02:54So, you have your entry candle and the engulfed candle.
02:58So, we take the previous high, which is over there.
03:01That is where your stop loss should be, not on any of the two candles
03:06but the previous high of the candles.
03:11Now, you are risking $316 in order to earn.
03:16One is a three, one is a two.
03:18You got to wait it out and see.
03:20Now, next step, eyes on stochastic.
03:25The only way where we can take our profit is when the next candle goes up,
03:32up, down and then breaks the 20th percentile.
03:36That is where we are going to exit our trade.
03:41How long will it take?
03:43Not too sure.
03:44We just have to wait it out and see.
03:47And there we go.
03:48We let the trade run again.
03:51Now, if another opportunity of, if you spot another engulfing candle within this trade,
04:00you might as well just go enter.
04:04Don't waste time because the only thing that you are thinking about
04:07or you're applying this strategy is engulfing.
04:11So, just have engulfing in your head.
04:13Nothing else matters.
04:16So now, we're just letting the trade run
04:19and we see if we can spot another engulfing candle.
04:23If we can't, so be it.
04:26So, the trend is going downwards.
04:29Meaning, you should only look out for bearish engulfing.
04:32Even if a bullish engulfing is presented to you, do not take that trade.
04:39You've already decided this is a bearish sentiment,
04:42you're only looking out for a bearish engulfing candle.
04:45And that is the only point of time you should enter a trade
04:50where you spot a bearish engulfing.
04:52At this time, you should already set your break even.
04:55Meaning, move your stop loss slightly below your entry point.
04:58So, if the market hits or goes back towards the direction of our entry point,
05:03we would have earned $43.10.
05:08The trade is still running now.
05:11And we can see that, oh, there's another engulfing candle over there.
05:16All right, right over there.
05:21Bearish engulfing, downtrend, 15 minutes, fits the bill, enter another sell.
05:29So, now you have two positions of 1.0 running.
05:35TradingView will just automatically calculate for you your current running profit, which is at $404.4.
05:44Now, is it time for us to exit?
05:47I don't think so.
05:48Because if you look at the stochastic, it is still floating around the 50th percentile.
05:55It hasn't reached the 20th percentile yet.
05:5820th percentile is where you want to exit or consider exiting your trade.
06:03Now, it has entered the 20th percentile.
06:07And then it has made a strong pullback.
06:09One 15-minute candle over there.
06:11And you can see that it is making a possible upward trend again.
06:19So, for me, I would have call it a day, taken my profit at $628.
06:27So, that is how you are going to do your engulfing method if you are only applying this strategy.
06:37Nothing else.
06:39Don't look at any other charts.
06:40Don't look at any other strategies.
06:42No EMAs, no nothing.
06:44Just engulf and you're stochastic.
06:47That is all that you need to pay attention to.
06:50Engulf, enter a trade with your stop loss on the previous high.
06:56Not the previous engulfed candle, but the previous, previous high of that candle.
07:02But in this example, it was a previous, previous high.
07:05And then after that, let the trade run.
07:08Where do you exit?
07:09Where the stochastic tells you where to.
07:12If another buying opportunity is presented to you or bullish engulfing is presented to you,
07:18do not enter that trade.
07:20If another bearish engulfing that is presented to you, please enter that trade.
07:28Where do you TP?
07:29The same place where you are expecting your stochastic will make a possible reversal upward.
07:36Once it crosses, form a cross and crosses your 20th percentile, that is where you make your entry.
07:42And that is how you do the children engulfing 101.
07:47It's an easy, easy trade.
07:49Let's go.
07:51Nice and easy.
07:52Easy trades.
07:53Let's go.