What Is a Master Candle?
A Master Candle is a large candle that engulfs the next 4 smaller candles. These 4 candles must be completely within the high and low of the Master Candle.
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Strategy Rules
1. Identify a Master Candle:
Look for a large candle (any time frame, but 15m and 1H are popular).
The next 4 consecutive candles must be inside the range (high and low) of the Master Candle.
2. Draw High and Low Lines:
Mark the high and low of the Master Candle.
This creates a "box" or range.
3. Trade the Breakout:
Once price breaks above or below the range of the Master Candle after the 4 inside candles, you take the trade in that direction.
4. Stop Loss (SL):
Just outside the opposite side of the Master Candle’s range.
5. Take Profit (TP):
Based on risk-reward (commonly 1:1, 1:2).
Or until strong support/resistance or trailing stop.
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Extra Filters (Optional but Helpful):
Use with trend direction (e.g., using moving averages).
Confirm with volume or momentum indicators (e.g., RSI or MACD).
Avoid trading during low liquidity sessions (e.g., end of NY or pre-Asian).