Yes 5m for engulfing candle, happens very often but I only takes the trade if other factors are aligned.
Hi, inzimam,
Thx for posting your ideas. As Jason and the others here have posted, ideas are only the starting "vibrations/energies" for a new trader to launch into his/her research.
Ideas stem from curiosity - couple it with some learning/studying/knowledge - and then mold it to your time frame(s).
Since you indicated M5 for engulfing pattern setups - then you must already have some internal "bias" for this criteria. So move forward and take action and create your own trading reality:
1. Define your ideal chart setup criteria on M5 - and start only with LONG trading setups. No need for SHORT setups until you find out if the LONG side is profitable or not.
2. Define Entry price point, Stop-Loss Proven Wrong point. You seem to already have a Target point selected.
3. Then consider a base "bet" like $1 or $100 for testing R&D purposes.
Since M5 is such a small time-frame approach - be sure to generate more test data points. Some ideas you will need to use to test M5 time-frames:
4. Test if morning setups (like first 90 mins) is different vs end-of-day setups (last 60 days).
5. Test if Mon vs Tues vs day of wk makes a difference (news events, earnings).
6. Test if LONG M5 setups have different outcomes vs Up and Down Trends in higher time-frames (like vs H1 or H4 or Daily time-frames).
7. Test if LONG M5 setups perform differently at Key price levels (like at mov avgs, at lower bands [Bollinger, Keltner], at Oversold levels [stochs, RSI, macd]), at Support levels off H1 or D1, or Fib Support levels, etc.
In other words - since you already have curiosity and bias towards using the M5 engulfing pattern - then have fun and be very creative. Really look to isolate as many different scenarios that bullish M5 engulfing patterns can "intersect" in random price action. :idea:
The more M5 engulfing LONG setup "environments" you can isolate - then the more robust your results will be in the R&D phase. Try to select out at least 15-30 trading setups PER long M5 engulfing setup vs its numerous scenarios. :whistling
I know this is "hard work" - but really - you must believe and have the self confidence that you deserve only the very best R&D results: robust, with enough data points per scenario, etc.
If you find early on that the results are not encouraging - then you will reach the critical point of pushing your creativity even further. It is human nature to "change" the trading rules/criteria if you find results unfavorable. TRY very hard not to do this - keep same rules, scenarios, criteria, for at least 10-15 trading setups.
Good luck - I know it is very hard to "start" to overcome inertia of R&D backtesting! But easier if you put all of your creativity and excitement into the effort - to know that you are on your way to create your own "profit machine". :clap:
Don't hesitate to ask here in T2W on the backtesting process - it needs to be done correctly like in all of the "CSI" tv shows out there! Experienced T2W traders can help give guidance to avoid R&D traps/errors/unseen critical biases. Track down books on systems development and backtesting (Tharp, Deel, Stendahl, Schwaeger, Simons).
Regards,
WklyOptions
