What to do when encountering a strong engulfing candlestick?
Actually, there are three ways, depending on whether you prefer 'cost-effectiveness' or 'certainty'.
1. Limit order: Place a limit order in advance at the halfway (50%) point of the engulfing candlestick's body. The advantage is high cost-effectiveness, but it may not get filled.
2. Enter after confirmation: Wait until the engulfing candlestick closes or the next candlestick opens to enter, pursuing certainty, but the price is usually worse.
3. Wait for a breakout below: Only enter after the price breaks below the low of the engulfing candlestick. This is the most conservative approach, suitable for those who prefer to wait until the trend is clear before taking action.
It's difficult to achieve both 'cost-effectiveness' and 'certainty', so the core issue is not which method is better, but whether you can accept a pullback and whether you can wait for confirmation.
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