Engulfing candle entry points

[Keith Bowtell]

Rich

Can you explain a bit more about how to get a good entry price after a solid engulfing candle appears?

The issue I’m having is that when the engulfing candle period ends and I see a good opportunity to enter a trade the price has already gone beyond the 1 pip above/below the high/low.

When entering order Metertrader comes back with an error on price

Also what does the “open price must differ from market price by 14 pip” refer to, is this the actual trading price or spread price shown in the order ticket chart. How does this affect he 1 pip above / below engulfing candle rule?

[Rich Fitton]

Hi Keith,

Great question – this is one that will be useful for all traders to be aware of.

Yes, if the market has already passed the entry point Metatrader won’t accept a STOP order (a buy stop has to above the market price and a sell stop has to be below it).

Here’s what you can do on the occasions when the market is trading right at the extreme of the engulfing candle as it comes to a close (i.e. where there’s a chance the entry price will be surpassed before you have chance to get your order in or if the market has already surpassed it)…

Use a MARKET ORDER (“instant execution” on MT4) to enter the trade immediately once you see the market trade at the entry price (don’t worry about getting your order filled a pip or two above the ideal entry price, remember we’re not trying to trade with surgical precision for just a few pips of profit – targeting those high reward:risk ratios on the trades ensures your approach stays robust).

Have a stop loss of say 20 pips already entered into the order ticket for your market order. It’s important to have some protection as soon as you are in the trade and you can take a moment to adjust it back to your desired stop loss location once you are holding the position. You can do the same with the take profit too – get one into the market and then adjust it to the accurate level once the urgency to actually enter your order has passed.

You can have all this prepared in advance of the candle closing so there is no time pressure at the actual point of entering the trade.

(I’ve attached an image of how it might look in MT4. At this point you’d be ready to hit ‘buy’ or ‘sell’ to get you straight into the trade.)

You can use the same practice to get you into trades where the stop order would fall beyond the broker’s threshold for accepting pending orders in that market (i.e. the 14 pip message you saw). If you needed to go away from the screen you could enter a stop entry order at the best available price (so you don’t miss the trade in the meantime) and go back to monitoring the market on your return.
In this case you’d either get into the trade with your market order or the market would move away from the entry price allowing you to place the pending stop order.

P.S. I edited out a big string of computer code that was inside your original post. Were you trying to include an attachment? If you’d still like me to see it can you try again using the ‘choose file’ button you’ll see below the typing space for you forum post. Many thanks.

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[Keith Bowtell]

Rich

Thats  what was the conclusion i came to

Just to clarify, when entering trade at market execution the SL and TP are in pips required not trade price?

The market execution price will include the brokers spread so will not know what the actual price is until after execution?

Thanks

ps not sure what the code was, i did paste the question from a word program so may have been that what caused the coding

 

 

 

[Rich Fitton]

Sorry Keith, didn’t mean to confuse you with the order ticket. You would need to enter the actual price you want the stop loss & take profit to initially appear at. Just put them at approx 20 pips for stop loss & maybe 40 pips for take profit, you’ll be adjusting them inside the next minute anyway. I’ve replaced that image with a straightforward example.

Yes, with market orders you won’t know your exact fill price until you’ve got your position. You can use the ‘Enable maximum deviation from quoted price’ checkbox if you like, you can set it so your order will not execute if the market moves by, say, more than 3 pips before you get your fill.

[Jonathan Marland]

Hi Rich,

You mention the 15 minute chart for entry points for the engulfing candles, but we can use these on the hourly and daily chart as an entry point for the trade?

Regards

 

Jonathan

[Rich Fitton]

Hi Jonathan,

Sure, you can use them on 60min charts – we’ll look at that as an option in the going live section.

You can use them on daily charts too but you wouldn’t see as many regular opportunities – not to say you can’t keep an eye out though 🙂

[John Murphy]

Watching an entry on AUDUSD (not actually in it). Engulfing candle at 14:45. Entry 0.7611 and using support at 0.7594 as target level. Interested in this because end of working day and more likely time I’ll be able to trade.

 

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[Rich Fitton]

Hi John, looks good on the 15min chart. Did you check the daily for your support levels too? Market is right on it so it might be a bit aggressive selling into this.

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