ENGULFING PATTERN MT4 Indicator and Trading strategy You Will Ever Need

The Only Engulfing Indicator and Trading Strategy You Will Ever Need.

The Engulfing Pattern is one of those setups every trader should know. At first, most people think these candles only show up at the end of a trend to signal a reversal. And yes, they often do—but that’s only part of the story.

What many beginners overlook is that engulfing candles can also form inside a strong trend, and when that happens, the signal is just as important.

Instead of warning you that a trend is ending, these patterns can actually confirm that the momentum is still going strong.

That little detail changes everything. You’re no longer just hunting for tops and bottoms—you’re learning to spot continuation moves that allow you to stay with the trend longer.

The result? Cleaner entries, stronger confidence, and the chance to catch much bigger profits.

And if you combine this setup with a dedicated Engulfing Indicator, the whole process becomes even easier. The indicator scans the charts for you, highlights the signals, and lets you focus on what matters most: making solid trading decisions without all the second-guessing.

If you’ve ever wondered how to trade the Engulfing Pattern effectively, this guide is for you. I’m going to walk you through a simple, four-step process that shows exactly how to spot this setup and use it to capture serious profits.

Along the way, we’ll also break down the key features that make an engulfing pattern truly worth trading—because not every candle qualifies.

Understanding these details is what separates winning trades from wasted opportunities. By the end, you’ll know how to boost your profit potential while keeping your risk under control.

So, let’s dive right in.

 

STEP 1. Isolate the Trend

The very first step when using the engulfing candle strategy is identifying the overall market trend.

Before you even think about entering a trade, you need to know whether the market is moving upward or downward, because that’s the direction you’ll want to align your trades with.

Trading in the same direction as the dominant trend gives your setup a much higher probability of success and keeps you from fighting against the broader market momentum.

 

STEP 2. Watch for an Upward or Downward Pullback

After you’ve confirmed a clear trend, the next move is to wait patiently for a pullback.

This step is crucial because if the market isn’t trending—or if the direction is too messy to read—this strategy simply won’t work.

A pullback is basically the market taking a breather, moving temporarily against the main trend before continuing in the same direction.

By entering during this corrective phase, you’re positioning yourself at a better price, which increases your potential reward once the trend resumes.

 

STEP 3. Entering the Trade

Once you’ve identified the trend and spotted a pullback, the next step is to look for confirmation through the engulfing candle pattern.

In a bearish setup, that means waiting for a strong red (down) candle to completely cover or “engulf” the previous green (up) candle.

This engulfing action signals that sellers have regained control after the brief correction, giving you a clear opportunity to enter in the direction of the overall trend.

 

STEP 4. Exiting the Trade

An engulfing candle that appears after a pullback within a larger trend often acts as a trigger to join the market right before the next leg of that trend develops.

The idea is simple: the pattern suggests momentum is shifting back in favor of the dominant direction.

However, markets don’t always move in a straight line. Sometimes a trend can continue for a long stretch, while other times it can fade out almost immediately.

Because of this uncertainty, the engulfing strategy by itself doesn’t dictate a fixed exit point—traders need to combine it with risk management rules and clear profit-taking plans.

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Low-Risk “Forex & Stock Market” Trading with EMA and Parabolic SAR indicator . The nice thing about the Parabolic SAR is that it is really simple to use. We mean REALLY simple. Basically, when the dots are below the candles, it is a BUY signal.  When the dots are above the candles, it is a SELL signal.

This is probably the easiest indicator to interpret because it assumes that the price is either going up or down. With that said, this tool is best used in markets that are trending, and that have long rallies and downturns.

You DON’T want to use this tool in a choppy market where the price movement is sideways.

 

This strategy can be used on any time frame on your chart. So day traders, swing traders, and scalpers are all welcome to use this type of strategy.

Here are the indicators you need to apply on your chart to use this trading strategy:

• Parabolic SAR indicator: Default Settings.
• 40-period Exponential Moving Average = Blue color in our example
• 20-period Exponential Moving Average = lime color in our example

This “EMA Parabolic SAR” trading strategy will show you how to use the parabolic SAR indicator effectively and how you can add this trading system into your daily trading techniques.

 

• Download “TraderVersity-EMAparabolicSAR” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-EMAparabolicSAR.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-EMAparabolicSAR” trading system and strategy.
• You will see the “TraderVersity-EMAparabolicSAR” system is available on your Chart.

 

When seeking to open buy positions, observe indicator readings as follows:

• Rule number 1: Apply Parabolic SAR and Moving Average indicators to your chart.
• Rule number 2: The moving averages must cross over.
  • In a long trade, the 20 period moving average will cross and go above the 40 periods moving average.
• Rule number 3: The Parabolic SAR Indicator must change to be below price candle.
  • Notice how the dots were above the price. The parabolic SAR formula showed us that the price stalled out for a few candles and then the dot appeared below the candle. This is a sign that a reversal may be forming.
  • Since the moving averages are telling us that a downtrend is most likely going to occur, we will wait until the dot appears again below price candle to validate this reversal and enter a trade.
• Rule number 4: Parabolic SAR dot must be below price candle AND moving averages cross to where 20 period MA is above 40 period MA.
  • Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as there are both elements, the entry criteria are met.
• Rule number 5: Enter The Next Price Candle.
  • Enter BUY the very next price candle after the dot appears below the candle.
• Rule number 6: Stop loss / Take Profit
  • Simply set and move your stop-loss to the price level of each dot in the direction of your trade.

 

When seeking to open sell positions, observe indicator readings as follows:

• Rule number 1: Apply Parabolic SAR and Moving Average indicators to your chart.
• Rule number 2: The moving averages must cross over.
  • In a short trade, the 20 period moving average will cross and go below the 40 periods moving average.
• Rule number 3: The Parabolic SAR Indicator must change to be above price candle.
  • Notice how the dots were below the price. The parabolic SAR formula showed us that the price stalled out for a few candles and then the dot appeared above the candle. This is a sign that a reversal may be forming.
  • Since the moving averages are telling us that an uptrend is most likely going to occur, we will wait until the dot appears again above price candle to validate this reversal and enter a trade.
• Rule number 4: Parabolic SAR dot must be above price candle AND moving averages cross to where 20 period MA is below 40 period MA.
  • Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as there are both elements, the entry criteria are met.
• Rule number 5: Enter The Next Price Candle.
  • Enter SELL the very next price candle after the dot appears above the candle.
• Rule number 6: Stop loss / Take Profit
  • Simply set and move your stop-loss to the price level of each dot in the direction of your trade.

 

No strategy can give you a 100% win ratio so always be placing your stops at the appropriate areas. I would recommend practicing making both short and long trades with this EMA Parabolic SAR trading strategy.

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High Accuracy Forex THV TRIX Trading System

HIgh accuracy “Forex THV TRIX System” – This is a simple trading system with very simple template display even an amateur trader will easily use it as a trading strategy.

• Time Frame: 15 min or higher
• Currency Pairs: any

 

• Candle Braker
• BBands
• THV3 Trix

• Download “TraderVersity.Com-THVTRIXsystem” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity.Com-THVTRIXsystem.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Meta Trader Client.
• Select Chart and Time frame where you want to test your Forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity.Com-THVTRIXsystem” trading  system and strategy
• You will see “Forex THV TRIX Trading System” is available on your Chart

 

• THV3 Trix green color and above 0 level
• Candle Braker green color
• BBands blue color

 

• THV3 Trix red color and below 0 level
• Candle Braker red color
• BBands red color

 

• Initial Stop Loss on the previous swing
• Profit Target is discretionary with Risk Reward Ratio 1:2 or 1:3

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