22:54 GMT+3 / 30.11.2023

An effective strategy "The candlestick engulfing model - a continuation of the trend"

In most cases, binary market pros find that the most accurate and effective signal to trade is directly generated by the price itself. A lot of trading strategies that relate to the technical direction of the trading system are built on this concept. Today, we will look at a system that generates signals using candlestick quote patterns of the underlying assets. This technical analysis strategy generates a signal for the end of short-term correction and allows you to conclude transactions on medium-term sustainable trend movement.

Let's start with the basics. The candlestick engulfing model is a market situation on the chart of the asset when, during steady trend movement or short-term price correction, a candlestick price is formed in the reverse direction with respect to the construction of the previous candlestick quotes, thus overlapping the previous candlestick price with its body. In practice, this situation looks like the following:

Binomo Platform

This highly cyclical pattern in the market allows you to get the most accurate quote reversal signals of main trend movement after the end of correction, or it gives you the opportunity to identify pivotal trend reversals on the chart.

What is needed to apply this trading strategy?

Here, all system indicators are related to the technical side of terminal operation and the parameters of the trading conditions. For productive trading on this effective strategy, the following is necessary:

  • Accurate market quotes
  • A terminal with the display function of price in the form of Japanese candlesticks
  • Contracts with a short-term maturity range
  • A choice of assets
  • The minimum trading conditions

Good results from the trading strategy were demonstrated on the Binomo broker’s platform, which is fully equipped with all the necessary technical means and trading conditions, and which also offers its clients the minimum trading parameters - a balance start at 10 dollars, minimum contracts of 1 dollar.

Binomo Platform

Trading on the effective strategy of "The candlestick engulfing model - a continuation of the trend"

In this embodiment, the candlestick engulfing model is used in a situation in which the end of short-term correction of market fluctuations is identified.

Therefore, contracts UP are registered on growing trends upon the identification of bullish candlestick engulfing patterns after price rollback correction:

Binomo Platform

As you can see, the engulfing model clearly defines the price levels of the end of correction and allows you to register contracts in the most favorable market positions.

For contracts DOWN, the opposite direction of building for the candlestick model is used - on a downtrend after the formation of short-term upward correction, a bearish candlestick engulfing pattern is formed:

Binomo Platform

The advantage of this effective strategy is the precision and high cyclicality of the trading signal, and the wide range of expiry terms for transactions. The system works equally well for options with maturities of 60-180 seconds and for contracts with maturities of 5-15 minutes. In addition, packages of contracts with combined maturity periods can be used for risk diversification.

Money management for the trading strategy

The rules for reducing losses and trading risks when using the signal strategy are to limit the maximum value of contracts to the level of 3% of the amount of operating funds. When trading on accounts with the minimum amount of funds, the optimal trading regime would be to use the initial value of contracts.

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Trading in Financial Markets carries a high level of risk for investors. All materials are published for informational purposes only.