When encountering a strong engulfing candlestick, how should one enter the market?
There are actually three methods, depending on whether you prioritize 'cost-effectiveness' or 'certainty'.
1. Limit Order: Place an order in advance at the halfway point (50%) of the engulfing candlestick's body. The advantage is high cost-effectiveness, but there is a possibility you won't get filled.
2. Enter after confirmation: Wait until the engulfing candlestick closes or the next candlestick opens before entering. This method seeks certainty, but the price is usually worse.
3. Wait for a breakout below the low: Only enter after the price breaks below the low of the engulfing candlestick. This is the most conservative approach and is suitable for those who wait for a clear trend before acting.
It is difficult to achieve both 'cost-effectiveness' and 'certainty', so the core issue is not which method is better, but whether you can accept drawdowns and whether you can wait for confirmation.
