Engulfing strategy with DMI confirmation

2020年10月6日

The strategy contains Bearish and Bullish Engulfing trend reverse alerts with entry and closure notifications. Entries are enforced by Directional Movement Index (DMI) indicator levels combination. The strategy can be applied to spot, futures and marginal trading exchanges. It is suitable for both long and short positions and works accurately with BTC, USDT, ETH and BNB quote currencies. Best to use with 1H timeframe charts

Strategy elements can be configured at your own desire with user interface settings, no programming skills required:
1. Choose signals type: Long, Short or Both
2. Choose trend detection pattern rule:

• SMA50 - provides a higher number of positions
  
• SMA50 + SMA200 provides a higher accuracy
  3. Change risk management settings to make the most accurate and efficient configuration. You can set up unique stop loss, take profit and trailing offset for different assets
  4. Configure strategy periods
  
• DMI and ADX lengths
  
• ADX Smoothing
  
• Key level
  
• EMA and SMA lengths
  5. Configure backtest dates
  6. Show or hide RSI support and resistance bands
  
  Engulfing strategy provides information for traders to enter the market in anticipation of a possible reversal in trend. Engulfing candles tend to signal a reversal of the current trend in the market. This specific pattern involves two candles with the latter candle "engulfing" the entire body of the candle before it. The engulfing candle can be bullish or bearish depending on where it forms in relation to the existing trend. The script calculates and compares values of the price action candles to define is there an engulfing and what type it is: bullish or bearish
  
• If there is a bullish engulfing the indicator fills price action candle with yellow color
  
• If there is a bearish engulfing the indicator fills price action candle with purple color
  
  Advantages of the script:
  1. The script detects presence of both types of engulfing: Bullish and Bearish
  2. Weak engulfment signals and market noises are filtered by RSI bands and DMI confirmations. This allows to receive only strong and confirmed engulfment signals
  3. This script has configurable risk management settings (order size, commission, take profit, stop loss and trailing). This provides you opportunity of direct broker connection and allows to conduct backtests before applying the strategy to real account. You also can set up strategy actions alerts
  
  At the chart you can see the historical price action of ADAUSDT at Binance exchange from the January 1st 2019 till current date. The strategy is set up to receive only long signals because it is a spot market. Moments when the strategy triggered to enter a position are shown as L label while position entries are shown as "Long" messages. Moments when a certain position should be closed are shown as "Exitlong" messages
  
  The strategy demonstrate high backtest results:
  
• Mathematical expectation of risk management settings is positive = 1.34%
  
• Percent profitable = 93.33%
  
• Profit factor = 3.253
  
• Quantity of entries = 75
  
• Net profit = 15.22%
  

How to use?
Long signals:
1. Apply indicator to a trading pair your are interested in.
2. Click Settings button and select Alert Positions Type Long
3. Once bullish engulfing and confirmation conditions are met price action candle will be colored yellow and script strategy will enter a position.
4. Check Strategy Tester to set up optimal Risk management settings: stop loss, trailing profit activation point, trailing offset
5. Set up the strategy alert to be notified when a position should be opened or closed

Short signals:
1. Apply indicator to a trading pair your are interested in.
2. Click Settings button and select Alert Positions Type Short
3. Once bearish engulfing and confirmation conditions are met price action candle will be colored purple and script strategy will enter a position.
4. Check Strategy Tester to set up optimal Risk management settings: stop loss, trailing profit activation point, trailing offset
5. Set up the strategy alert to be notified when a position should be opened or closed

Best regards,
SkyRock Signals team


If you want to receive access to the strategy please contact us in personal message!