Something Interesting in Financial Video - page 16

Sergey Golubev
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Sergey Golubev  

Candlestick Charting - Bearish Engulfing Pattern


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Libraries: MQL5 Wizard - Candlestick Patterns Class

newdigital, 2013.09.11 16:21

Bearish Engulfing Pattern


The Bearish Engulfing Candlestick Pattern is a bearish reversal pattern, usually occuring at the top of an uptrend. The pattern consists of two Candlesticks:

  • Smaller Bullish Candle (Day 1)
  • Larger Bearish Candle (Day 2)


Generally, the bullish candle real body of Day 1 is contained within the real body of the bearish candle of Day 2.

The market gaps up (bullish sign) on Day 2; but, the bulls do not push very far higher before bears take over and push prices further down, not only filling in the gap down from the morning's open but also pushing prices below the previous day's open.

With the Bullish Engulfing Pattern, there is an incredible change of sentiment from the bullish gap up at the open, to the large bearish real body candle that closed at the lows of the day. Bears have successfully overtaken bulls for the day and possibly for the next few periods.

The chart below of Verizon (VZ) stock shows an example two Bearish Engulfing Patterns occuring at the end of uptrends:


Bearish Engulfing Sell Signal

Three methodologies for selling using the Bearish Engulfing Pattern are listed below in order of most aggressive to most conservative:

  1. Sell at the close of Day 2. An even stronger indication to sell is given when there is a substantial increase in volume that accompanies the large move downward in price.
  2. Sell on the day after the Bearish Engulfing Pattern occurs; by waiting until the next day to sell, a trader is making sure that the bearish reversal pattern is for real and was not just a one day occurance. In the chart above of Verizon, a trader would probably entered on the day after the Bearish Engulfing Pattern because the selling continued.
  3. Usually trader's wait for other signals, such as a price break below the upward support line, before entering a sell order. However, in the case of Verizon above, the Bearish Engulfing Pattern occured at the same time as the trendline break below support.

An example of what usually occurs intra-day during a Bearish Engulfing Pattern is presented next.

Intra-day Bearish Engulfing Pattern

The following 15-minute chart of Verizon (VZ) is of the 2-day period comprising the Bearish Engulfing Pattern example on the prior page:


  • Day 1: As is seen in the chart above, Day 1 was an up day, closing near the day's high (bullish sentiment).
  • Day 2: The open was a gap up, a very bullish sign; nevertheless, the bulls ran out of buying pressure and prices fell the rest of the day, closing near the day's lows (bearish sentiment) and lower than Day 1's lows.
The Bearish Engulfing Pattern is one of the strongest candlestick reversal patterns. Its opposite is the Bullish Engulfing Pattern



forexfundfounder
21
forexfundfounder  

Hello Sergey Golubev,


Do you have any course for free?


Thank you in advance!

Sergey Golubev
Moderator
119429
Sergey Golubev  
forexfundfounder:

Hello Sergey Golubev,


Do you have any course for free?


Thank you in advance!

Financial and trading videos - Table of Contents
Financial and trading videos - Table of Contents
Financial and trading videos - Table of Contents
  • 2013.10.02
  • www.mql5.com
Under construction - Stay tuned ! MT5 platform. Famous traders / Interviews. Indicators.Not yet Classified...
Sergey Golubev
Moderator
119429
Sergey Golubev  

Trading The Martingale and Anti Martingale Strategies

In today's lesson we are going to look at the two categories that most position sizing strategies fall into which are known as martingale strategies and anti martingale strategies.


A position sizing strategy which incorporates the martingale technique is basically any strategy which increases the trade size as a trade moves against the trader or after a losing trade. On the flip side a position sizing strategy which incorporates the anti martingale technique is basically any strategy which increases the trade size as the trade moves in the traders favor or after a winning trade.

The most basic martingale strategy is one in which the trader trades a set position size at the beginning of his trading strategy and then double's the size of his trades after each unprofitable trade, returning back to the original position size only after a profitable trade. Using this strategy no matter how large the string of losing trades a trader faces, on the next winning trade they will make up all their losses plus a profit equal to the profit on their original trade size.

As an example lets say that a trader is using a strategy on the full size EUR/USD Forex contract that takes profits and losses both at the 200 point level (I like using the EUR/USD Forex contract because it has a fixed point value of $1 per contract for mini forex contracts and $10 per contract for full sized contracts but the example is the same for any instrument)

The trader starts with $100,000 in his account and decides that his starting position size will be 3 contracts (300,000) and that he will use the basic martingale strategy to place his trades. Using the below 10 trades here is how it would work.

As you can see from the example although the trader was down significantly going into the 10th trade, as the 10th trade was profitable he made up all the his losses plus a brought the account profitable by the equity high of the account plus original profit target of $6000.

At first glance the above method can seem very sound and people often point to their perception that the chances of having a winning trade increase after a string of loosing trades. Mathematically however the large majority of strategies work like flipping a coin, in that the chances of having a profitable trade on the next trade is completely independent of how many profitable or unprofitable trades one has leading up to that trade. As when flipping a coin no matter how many times you flip heads the chances of flipping tails on the next flip of the coin are still 50/50.

The second problem with this method is that it requires an unlimited amount of money to ensure success. Looking at our trade example again but replacing the last trade with another loosing trade instead of a winner, you can see that the trader is now in a position where, at the normal $1000 per contract margin level required, he does not have enough money in his account to put up the necessary margin which is required to initiate the next 48 contract position

So while the pure martingale strategy and variations of it can produce successful results for extended periods of time, as I hope the above shows, odds are that it will eventually end up in blowing ones account completely.

With this in mind the large majority of successful traders that I have seen follow anti martingale strategies which increase size when trades are profitable, never when unprofitable.


Forum on trading, automated trading systems and testing trading strategies

Trading: What is Martingale and Is It Reasonable to Use It?

Proximus, 2013.08.24 03:00

It works if the net profit factor is above 1 and the win rate is higher than 50%, martingale is a double or nothing either doubles your money or doubles your losses, so if you have a 60% win rate with 1:1 RR ratio you can use it safely, if not then dont.


Whats funny about forex that you dont start from 50% win rate from the start because the market is changing not a fix probability set like a roulette or blackjack game.So if you start it like a betting system you will have like 40% win rate with 1:1 RR if you take trades random, maybe on the 9999999999999999999999th trade you hit 49.9% but thats still not enough.So it is better to filter out crappy trades first and then increase your win rate to be martingale compatible! And this is the advantage of investing vs gambling, you can filter out bad trades, on the roulette or blackjack you cant filter out bad hands or spins unless you cheat, but surely not the statistical way!!


This is how my 60% win rate, real martingale system looks like, and how it should suppose to look like, on LEVEL 7 settings (2^7)

Here are my martingale type systems:

1) CLASSICAL MARTINGALE AFTER 567 TRADES (60% WR, 1:1 RR)


As you can see after 500 trades it barely hit LEVEL 7 and even if we would lost that we would lose only half of the profit and continue from there to grow it back!

Of course you need a big account for this like one that can support like 10 lot size trades to be only 1% account risk, but statistically its very improbable to blow your account since its only 1% risk versus huge potential gains...The martingale presented in this article is BS with like 40-45% win rate which is sadly not enough, not even 50% is, must be 51 or higher...

2) PROGRESSIVE DYNAMIC GROWTH MARTINGALE (60% WR, 1:1 RR)


3) PROGRESSIVE STATIC GROWTH MARTINGALE (60% WR, 1:1 RR)


4) ANTI MARTINGALE or INVERSE MARTINGALE (60% WR, 1:1 RR)


enjoy and good programming ;)

Forum on trading, automated trading systems and testing trading strategies

Usefull links/threads/tools

Sergey Golubev, 2017.09.23 07:42

Martingale, Hedging and Grid

The forum threads

  1. Martingale vs. Non Martingale (Simplified RoR vs Profit and the Illusions)
  2. Definition: classical martingale, progressive dynamic growth martingale, progressive static growth martingale, anti martingale or inverse martingale
  3. Martingale, Hedging and Grid : MHG
  4. Featured Martingale EA to explore and expand, provided by a programmer 
  5. Does a safe Martingale exist ?
  6. Why people are still trying Martingale Systems?
  7. The Video - Trading The Martingale and Anti Martingale Strategies

CodeBase

  1. Angry Bird (Scalping) - expert for MetaTrader 4 - the settings and trades - look at this post.
  2. iRSI Martingale 10 Levels - expert for MetaTrader 5
  3. Grid Semiautomat Panel - expert for MetaTrader 5
  4. Grid Template EA - expert for MetaTrader 4
  5. VR---SETKA---3_v2 - expert for MetaTrader 5
  6. Grid - script for MetaTrader 5
  7. KNUX Martingale - expert for MetaTrader 4
  8. MacdPatternTraderAll0.01. Time+Martingale - expert for MetaTrader 4
  9. Pure_Martingale - expert for MetaTrader 4
  10. Trend_Catcher - expert for MetaTrader 5
  11. Ingrid Martingale - expert for MetaTrader 5
  12. MultiMartin - expert for MetaTrader 5
  13. N trades per set Martingale - expert for MetaTrader 4 
  14. Martingale Smart - expert for MetaTrader 4 
  15. Reversing Martingale EA - expert for MetaTrader 5
  16. VR Calculate Martingale Lite - indicator for MetaTrader 4
  17. VR Calculate Martingale Lite MT 5 - indicator for MetaTrader 5 
  18. Hoop master 2 - expert for MetaTrader 5
  19. Martingale EA - expert for MetaTrader 4
  20. Simple candle filter martingale EA - expert for MetaTrader 4
  21. RSI Martingale - expert for MetaTrader 5
  22. more here

The articles

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AmiBroker : converted from/to - the thread 

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