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Postby doaausef3li » Mon Oct 29, 2018 7:18 pm

It is a general opinion that to increase the risk / reward ratio we must be willing to lose the opportunity to profit or reduce the probability of our profit. In other words it is very risky to increase the reward level or reduce the stop loss from the value we have set. Of course you can prove it yourself through the experience of your trading strategy. One of the most effective and quite popular ways to increase the risk / reward ratio while maintaining the probability of profit is to look at the price movements in the lower trading time frame, and see if there is still a logical opportunity to change the stop loss or profit target.

The following is exemplified by GBP / USD at the end of July 2012 on the daily chart. We will enter the market based on signals from engulfing candlestick setup patterns that occur, and at the same time determine the risk / reward ratio. Below is a brief explanation to recall the nature of the candlestick pattern:
توصيات يومية
The engulfing candlestick pattern consists of two bars where one bar 'swallows' (engulf) the other bar with a longer body candle. This engulfing pattern will be more valid if you have a short tail or no tail, because a long tail reflects the uncertainty of the direction of price movement. Usually traders set the validity of this pattern with the provisions of the tail length "bar that swallows" not more than 20% -25% of the total length of the body candle. This pattern implies a trend reversal. The signal to open short positions on bearish engulfing pattern is more valid if it is formed in an uptrend, and conversely the signal to buy is more valid if the pattern is formed in the downtrend. In addition, if formed at a high trading time frame such as a daily chart, this engulfing pattern will be more accurate.
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Back to the example of GBP / USD daily (the following picture), it seems that the setup of engulfing candlestick patterns is quite valid as a signal to open short positions. Normally, the trader opens short positions after the second candlestick of the engulfing pattern is completed, with the stop loss level above the second highest candlestick level, and the safest profit target at the risk / ratio 1 level: 1. If we observe further price movements, target a profit of +105 pips will be realized in two bars or approximately two days.
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