This Secret Candlestick Pattern Makes Trading "Too Easy"... (Perfect For Beginners)

Candlestick patterns are one of the main ways professional Traders enter the market so if you don't have an effective Candlestick pattern you can use for entries then it could be a main reason that you're not quite profitable yet so whether you are a complete beginner or just someone who's been struggling with your trading for a while by the end of this video you will be able to quickly and easily spot a very effective Candlestick pattern this Candlestick pattern has helped me win a large number of Trades over the past few years and is a pattern I use to this day in my own trading so right after the intro and disclaimer I'm gonna give you every rule to this pattern so you too will have an effective Candlestick pattern to use anytime you want to place a trade so if that sounds good go ahead and click that like button for me go ahead and subscribe if you are new [Music] thank you welcome back and just in case you're brand new my name is Steven I've been trading for a little over a decade and on this channel I share all my trading skills that I've learned throughout my trading career in order to try to help you become a better Trader so let's first take a look at the bearish version of this Candlestick pattern you're going to be learning today the bearish version of this Candlestick pattern is something I call the s-h-e-c s-h-e-c stands for swing eye engulfing candle let's break down the first part of this swing high this means that this Candlestick pattern can only occur at the swing high of an overall trend let's say Trends are pushing up I need to see this at the swing I or the highest die of a trend or at the swing high of a pullback what that would look like is prices are moving down it would have to be the highest Candlestick of a particular pullback that would be the swing high of the pullback so that's the first step in understanding this Candlestick pattern and the anatomy of it next up we have engulfing candle in case you don't know what an engulfing candle is essentially it is when we have a candle that is a color change candle meaning we went from green to Red in a bearish version of this and the body of the red candle is larger than the body of the green candle if those two rules are met we have what is called an engulfing candle in Forex that engulfing candle will normally start at the same exact place as the previous candle in stocks you want to see this candle start a little bit above it for this swing High engulfing candle so to give you an idea of what we could see and the way we could use this pattern if prices were trending higher and we had let's say RSI Divergence which we'll talk about in just a second and let's say we were at a major level of structure that might be a time I decide to use a Candlestick pattern like the swing High engulfing pattern in order to enter a trade it gives you a good place to enter and again it's been effective for me over the years at proving to be profitable along with that it gives you a very easy place to put your stop loss above the swing high of this swing High engulfing candle and in the opposite direction we can use this even if we're trending down as long as it is the top of a pullback so that would look something like this markets are trending down and then this becomes the top of the pullback before the trend continuation in that downtrend so before we take a look at a bullish version of this let's go to some charts I'll show you a live trade I'm in right now using this exact Candlestick pattern along with the full breakdown of that trade so you can understand how I use this Candlestick pattern in combination with full strategies so let's go take a look at that right now this trade was on the Euro Canada and I'm going to break it down completely right now so let's go ahead and take a look at the Candlestick pattern tell me when you spot it in the comments section or just say it out loud whenever you spot the actual pattern itself does that look familiar where price is right now I'll zoom in a bit do we have what I would identify as a swing High engulfing again well what are the rules we need it to be the swinger which is the highest I in Trend or the highest high in a pullback is that the case here yes this High the red candle we see is in fact the swing high of the overall trend so far is it an engulfing candle well is the red body bigger than the green body that answer is yes so this is the actual Candlestick pattern that we entered on now let me break down the rest of the things that I'd like to combine with this swing High engulfing candle in order to turn it into a full strategy because as hopefully you already know if you don't no Candlestick pattern is going to be some type of Holy Grail you're going to have to combine different technical factors in order to ever come up with a profitable trading strategy so a Candlestick pattern is never going to be the secret the only thing this Candlestick pattern does is that when we have other conditions met like prices being at previous structure like RSI Divergence it gives us an edge and a rules based way to place a trade which is very important a lot of Traders try to place trades with random entry reasons all the time and that equals very inconsistent results whereas if you place trades in a consistent way with an effective pattern and with an easy place to put your stop loss that can help you turn a non-profitable strategy into a profitable strategy so in this case we had our engulfing candle happen and on top of that if I zoom out to the daily chart and we scroll left a bit you can see that this swing High engulfing pattern was happening at a major level of resistance so that's already step number one and if you don't know yet I create strategies based on something called c e s t we have our conditions followed by our entry followed by stops and followed by targets so the conditions here are we have a major level of structure on the daily chart the other condition that I really like to see but isn't completely necessary is RSI Divergence on either time frame this RSI Divergence can be happening here on the daily chart which we do have and or on the four hour chart which we'll look at in a second so RSI Divergence means that prices are creating higher highs while your RSI indicator is creating equal or lower highs in this case we have equal highs on the RSI indicator whilst getting higher highs on price I am nearly positive I just use the word whilst and I don't even know what that means so while getting higher highs on price lower eyes on the RSI indicator man it's hard to believe English is my first language dropping down now though to the four hour chart as you can see here on the RSI indicator we do in fact have what looks to be equal highs what is price doing creating higher highs so in this case whenever we're looking at this from a strategy standpoint a rules-based strategy which is what you need especially at the beginning or if you're struggling in order to become profitable and consistent if we look at this from a rules-based strategy standpoint we have the condition of the daily daily major structure my voice is not working today at all we have the condition of RSI Divergence and now after having those two things the only thing I'm looking for next is going to be my entry now the whole purpose of this video is to teach you this entry pattern that is our swing High engulfing pattern so we obviously have that entry for a stop loss like I already said I like to put the stop loss right above the previous odd the swing High engulfing candle so my stop loss goes above that and for my target specifically for me you can pick how you want to take targets I normally look back at previous structure and try to get something at or above a 1.4 to one reward to risk ratio as you'll see whenever I hit play this is a trade we sent out last week by the way I will put an image of that right over here so you can see that I set this trade to EAP and TTC University members I send these out two to five times a week if you want to learn more about that you can follow the first link in the description or go to www.ttcfxuniversity.com if not that's completely fine too but as you can see I did send this out in what I call email analysis now directly after sending this out in email analysis prices did in fact drop low enough to hit our targets right here at previous structure and for a little over a one to one at a 1.4 to 1 reward to risk ratio now let's take a look at a bullish version of this pattern if you haven't guessed by now it's the complete opposite of the bearish version of this pattern I called this one the s l e c this stands for swing low engulfing candle and in this case we're looking for the same thing we want to make sure that our Candlestick pattern is either the swing low of a trend meaning we're trending down and it's the lowest candle of the trending down that we have if that sentence even makes sense hopefully you understand what I'm saying other than that it can be the part it can be a part of a pullback so we can have prices pushing higher and then this just needs to happen at the end of a pullback this Wick needs to be the lowest Wick of the pullback of an uptrend that's how it's going to be classified as a swing low engulfing candle now ways we can use this are exactly the same major level of support something like RSI Divergence when prices are trending down in order to capture the reversal of a market or price is trending higher and using it at a pullback as we just discussed now let's go take a look at an example of this on the charts here on the pound Swiss chart what has just happened well hopefully you were able to spot the reversal in price we have prices that have been consolidating here not really putting in new highs and then eventually we get this push-up pullback and a new higher high this is our immediate sign of a possible uptrend starting so in this case we're looking at an uptrend and if we go to the swing high right here what I mean by the swing low of a pullback is from this swing High looking at the pullback is going to be the lowest Scandal that happens throughout the pullback so here it was this candle here was this candle these do not count as the swing low of the pullback obviously this does count as the swing low of the pullback so we're waiting on that to occur the swing low of a pullback and that candle also be an engulfing candle so let's see if you can spot win that happens here on the pound Swiss As I push prices forward not there not there not there not quite does that Candlestick pattern look familiar well it should because in this case we have the swing low of a pullback from our swing high and this candle is also an engulfing candle so this would be a valid version of the Swing Low engulfing candle now in this case we are going to look at this as a full strategy yet again using the acronym c e s t the main things I like to use as conditions are areas of value and some indicators the areas of value I like the most are major levels of structure and moving averages and on top of that I really like RSI Divergence as well those are probably a part of 90 of the trading opportunities that I take is those three indications major structure moving averages and the RSI indicator doing some type of Divergence along with a Candlestick pattern or chart pattern like you're learning in this video so for the conditions of this specific trade what do we have we have prices pulling back to a major level of structure so I'm going to count that as condition number one check we have prices at an area of value being this moving average this moving average is the 50 EMA so we have two different conditions met and if you wanted to turn this into an entire strategy then what you could say is I need at least two conditions say you use structure like this area of resistance that now could possibly become support like a moving average as an area of value whichever one you want to use and you tell yourself I need to see at least two conditions before looking for a possible entry now what could that entry be obviously for the scope of this video because that's what you're learning it could be the swing low engulfing candle right here now how would we set this up well c and e are now covered we need to find a place for our stop and our Target before we ever press the buy button so let's do that go and put a position tool on the chart stop loss is going to go under our swing low of this candle and again my target that structure slash about a 1.4 to 1 is what I normally use if we click play you'll see that prices did in fact push up and hit that quite easily now just because I know for a fact there's going to be a few people in the comments section that try this three times and lose all three times and then just go through the comment section yelling that it doesn't work at all because of those three attempts let me explain to you how trading actually works that way you don't fall into that trap if you don't have a full trading plan right now you do not need to trade this if you do not follow the steps I'm about to tell you even if you know this exact Candlestick pattern and the full strategy we've discussed with cesd throughout this video even with knowing that information you will lose money if you do not listen to the steps I'm about to tell you in order to be a professional Trader and actually make money in any Financial Market you will not only need a Candlestick pattern you will not only need strategies you're going to need a strategy that makes money over time you're going to need a risk management plan that keeps you emotionless and you're going to need the trading psychology in order to stay disciplined to those two things so knowing a strategy and knowing an effective Candlestick pattern is not the secret it's not the Holy Grail having good risk management with no strategy equals losing money as well and you could have a good risk management plan and a good strategy but not have any trading psychology and never stay disciplined to those two things then you would still lose money you need a combination of all three of these things think about it like gambling and a casino why do casinos make money a casino is not a non-profit organization they exist because that business makes loads of money how does the casino do it the casino does this by having a small advantage over the player in every single game on the floor every game in a casino has a slight advantage over anyone that walks in and gambles what we do with all three of these is we create a full trading plan that switches the script we create a full trading plan with a strategy that's proven to give us the edge a risk management plan that keeps us out of our emotions keeps us from making these emotional mistakes like switching strategies and moving our stop loss and moving our Target and the trading psychology and discipline to stick to all of that gives us a slight Advantage switches the script and turns us into the casino for that reason if we can Master these three skills a strategy that makes money over time a risk management plan that keeps you out of your emotions and trading psychology and or the discipline to stick to those things then you inevitably become the casino in over a long period of time you're the one with the advantage you're the one coming away making money otherwise if you do not follow the steps to create a full trading plan and you decide to go out here and just randomly trade this Candlestick pattern I can nearly get guarantee you you will lose money because at that point You're Still The Gambler walking into the casino the market is the casino until you create an effective trading plan that gives you an edge over it so let's talk about practical steps for a strategy you need to learn or create a rules-based strategy I like using the acronym CEST because it helps keep me consistent I have conditions entries stops and targets for every trade I place this not only keeps me consistent it gives me the ability to back test and validate this strategy I can take a look at all these rules through historic data and I can back test them that's what that is take a look at every time this this rules-based strategy happened and I can see has it provided an edge in the past is it something that's proven to make money if the answer is yes then I now have a strategy that's proven to make money in terms of risk management this is something that's completely up to the trader some Traders have a very high risk tolerance some have a very low one you need to determine what amount of money what percent of your account can you stand to lose without becoming extremely emotional on specific trades on one specific trade what is that number a lot of Traders choose two percent that might be too high it might be too low but this is about the average of what retail professional traders that are again professional and profitable tend to use it's something between one percent and two percent of their account value that they have at risk on a particular trade as in they have a set stop loss and the amount of money they're going to lose on that stop loss it's normally between one percent and two percent of their total account value and again this is something you'll need to decide for yourself in terms of trading psychology back testing having a good risk management plan will help a lot with your trading psychology understanding that trading is about a statistic Advantage will help as well and reading a ton of books listening to a lot of videos of Mark Douglas is something else that really helped me with my trading psychology at the beginning of my trading career if you go watch any videos from Mark Douglas or read any of his books you'll see a lot of similarities in the way I speak about trading psychology and in what he teaches the main reason for that is I count him as my main Mentor that taught me how to have good trading psychology and discipline and be okay and have a good trading mindset in my own personal trading so go take those actionable steps and if you want some help taking these steps then of course we do have some space available in the TTC Forex University you can get there by the top Link in the description or by going to www.ttcfxuniversity.com if that's not something you're interested in that's completely fine too be sure you're subscribed here like the video if you made it to the end comment if you made it to the end and I will like every comment that says they made it to the end I wish you the best of luck on your future trades it's hot here in Georgia so I'm gonna go hit the pool and I'll see you in the next video talk soon

Channel: The Trading Channel

Views: 204,118

Keywords: candlestick patterns, candlestick charts, candlestick analysis, candlesticks, candlesticks explained, candlestick trading, candlestick charts explained, candlestick patterns forex, candlestick psychology, candlesticks for beginners, candlestick patterns for beginners, candlestick charts for beginners, candlestick chart basics, candlestick chart technical analysis, candlestick chart secrets, candlestick bible, candlestick exercise

Id: OIXvIvDl2fM

Length: 18min 53sec (1133 seconds)

Published: Mon May 01 2023