Metatrader 5 Overview

Thanks for the tutorials. They really help in refreshing my knowledge of candlesticks

Candlesticks - Vol 12 - Piercing Pattern

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The Piercing Pattern is a bullish candlestick reversal pattern, similar to the Bullish Engulfing Pattern (see: Bullish Engulfing Pattern). There are two components of a Piercing Pattern formation:

• Bearish Candle (Day 1)
• Bullish Candle (Day 2)

A Piercing Pattern occurs when a bullish candle on Day 2 closes above the middle of Day 1's bearish candle.
Moreover, price gaps down on Day 2 only for the gap to be filled (see: Gaps) and closes significantly into the losses made previously in Day 1's bearish candlestick.
The rejection of the gap up by the bulls is a major bullish sign, and the fact that bulls were able to press further up into the losses of the previous day adds even more bullish sentiment. Bulls were successful in holding prices higher, absorbing excess supply and increasing the level of demand.

Piercing Pattern Candlestick Chart Example

The chart below of Intel (INTC) stock illustrates an example of the Piercing Pattern:




Piercing Pattern Candlestick Buy Signal

Generally other technical indicators are used to confirm a buy signal given by the Piercing Pattern (i.e. downward trendline break). Since the Piercing Pattern means that bulls were unable to completely reverse the losses of Day 1, more bullish movement should be expected before an outright buy signal is given. Also, more volume than usual on the bullish advance on Day 2 is a stronger indicator that bulls have taken charge and that the prior downtrend is likely ending.

A more bullish reversal pattern is the Bullish Engulfing Pattern that completely reverses the losses of Day 1 and adds new gains.
For further study, the bearish equivalent of the Piercing Pattern is the Dark Cloud Cover Pattern

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In this tutorial i will show how to install Metatrader 5 on Microsoft Windows 8, the latest operating system by Microsoft. In this tutorial the OS used are fully upgrade to latest build of Windows 8.1 Pro 64 bit.



First we go to metaquotes website and download the metarader 5 setup application and save it on desktop.

We go to desktop and locate the MT5 setup file and right click on it, then choose "Run as Administrator". The UAC (User Authorized Control) will pop-up a small windows and ask to continue or not, just click yes.

After that we will see MT5 setup window :



Metatrader 5 setup file will detect your operating system either 32 bit or 64 bit. So in the picture above it automatically provide MT5 64 bit setup file. We click next to continue.

Next window it will ask whether agree or not to the license agreement, click yes.



Next step we need to determine which hard disk that Metatrader 5 will be install, in this tutorial i choose C :



Once we have choose the path to install MT5 setup will continue installation. Wait for it to process the installation and after finish click "finish" button.





To start Metatrader 5, once again right click on the MT5 icon on the desktop, run it as administrator. Upon startup, MT5 will bring us to server address setup, you can choose the default server setup or choose metaquotes server address like access.metatrader5.com : 443, like example below :



After type the server address we want to use, click the scan button to ping the server. Then click on it and press next. After that setup will go to demo account opening window, choose new demo account.



The next step is to fill up necessary information and then click next to continue, our setup will finish afterwards.

This is how it looks like after finished our setup :

Candlestick Charting - Vol 13 - Bearish Engulfing Pattern

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Bearish Engulfing Pattern
The Bearish Engulfing Candlestick Pattern is a bearish reversal pattern, usually occuring at the top of an uptrend. The pattern consists of two Candlesticks:

• Smaller Bullish Candle (Day 1)
• Larger Bearish Candle (Day 2)

Generally, the bullish candle real body of Day 1 is contained within the real body of the bearish candle of Day 2.
The market gaps up (bullish sign) on Day 2; but, the bulls do not push very far higher before bears take over and push prices further down, not only filling in the gap down from the morning's open but also pushing prices below the previous day's open.
With the Bullish Engulfing Pattern, there is an incredible change of sentiment from the bullish gap up at the open, to the large bearish real body candle that closed at the lows of the day. Bears have successfully overtaken bulls for the day and possibly for the next few periods.
The chart below of Verizon (VZ) stock shows an example two Bearish Engulfing Patterns occuring at the end of uptrends:




Bearish Engulfing Sell Signal

Three methodologies for selling using the Bearish Engulfing Pattern are listed below in order of most aggressive to most conservative:

1. Sell at the close of Day 2. An even stronger indication to sell is given when there is a substantial increase in volume that accompanies the large move downward in price.
2. Sell on the day after the Bearish Engulfing Pattern occurs; by waiting until the next day to sell, a trader is making sure that the bearish reversal pattern is for real and was not just a one day occurance. In the chart above of Verizon, a trader would probably entered on the day after the Bearish Engulfing Pattern because the selling continued.
3. Usually trader's wait for other signals, such as a price break below the upward support line, before entering a sell order. However, in the case of Verizon above, the Bearish Engulfing Pattern occured at the same time as the trendline break below support.

An example of what usually occurs intra-day during a Bearish Engulfing Pattern is presented next.

Intra-day Bearish Engulfing Pattern

The following 15-minute chart of Verizon (VZ) is of the 2-day period comprising the Bearish Engulfing Pattern example on the prior page:

• Day 1: As is seen in the chart above, Day 1 was an up day, closing near the day's high (bullish sentiment).
• Day 2: The open was a gap up, a very bullish sign; nevertheless, the bulls ran out of buying pressure and prices fell the rest of the day, closing near the day's lows (bearish sentiment) and lower than Day 1's lows.

The Bearish Engulfing Pattern is one of the strongest candlestick reversal patterns. Its opposite is the Bullish Engulfing Pattern

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Candlestick Charting - Vol 14 - Bullish Engulfing Pattern

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Bullish Engulfing Pattern


The Bullish Engulfing Candlestick Pattern is a bullish reversal pattern, usually occuring at the bottom of a downtrend. The pattern consists of two Candlesticks:

• Smaller Bearish Candle (Day 1)
• Larger Bullish Candle (Day 2)

The bearish candle real body of Day 1 is usually contained within the real body of the bullish candle of Day 2.

On Day 2, the market gaps down; however, the bears do not get very far before bulls take over and push prices higher, filling in the gap down from the morning's open and pushing prices past the previous day's open.

The power of the Bullish Engulfing Pattern comes from the incredible change of sentiment from a bearish gap down in the morning, to a large bullish real body candle that closes at the highs of the day. Bears have overstayed their welcome and bulls have taken control of the market.




The chart below of the S&P 500 Depository Receipts Exchange Traded Fund (SPY) shows an example of a Bullish Engulfing Pattern occuring at the end of a downtrend:


Bullish Engulfing Buy Signal

There are three main times to buy using the Bullish Engulfing Pattern; the buy signals that are presented below are ordered from the most aggressive to most conservative:

1. Buy at the close of Day 2 when prices rallied upwards from the gap down in the morning. A strong indication that the rally on Day 2 was significant and truly a reversal of market sentiment, is if there was a substantial increase in volume that accompanied the large move upward in price.
2. Buy on the day after the Bullish Engulfing Pattern occurs; by waiting until the next day to buy, a trader is making sure that the bullish reversal and enthusiasm of the prior day is continuing and was not just a one day occurance like a short covering rally. In the chart above of the SPY's, a trader would likely not enter the market long on the day after the Bullish Engulfing Pattern because the market gapped down significantly and even made new lows. A trader using methodology #2, would likely wait for a more concrete buy signals such as the one presented in method #3 next.
3. After a trader sees the Bullish Engulfing Pattern, the trader would wait for another signal, mainly a price break above the downward resistance line, before entering a buy order.

An example of what usually occurs intra-day during a Bullish Engulfing Pattern is presented next.

Intra-day Bullish Engulfing Pattern

The following 15-minute chart of the S&P 500 exchange traded fund (SPY) is of the 2-day period comprising the Bullish Engulfing Pattern example on the prior page:

• Day 1: As is seen in the chart above, Day 1 was a down day, even closing the day at the low (bearish sentiment).
• Day 2: The open was a gap down, very bearish sign; but the bulls appeared to have had enough because the price of the SPY's went up the rest of the day, closing near the day's highs (bullish sentiment) and higher than Day 1's high.

The Bullish Engulfing Pattern is one of the strongest candlestick reversal patterns. Its opposite is the Bearish Engulfing Pattern

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Candlestick Charting - Vol 15 - Evening Star

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The Evening Star Pattern is a bearish reversal pattern, usually occuring at the top of an uptrend. The pattern consists of three candlesticks:

• Large Bullish Candle (Day 1)
• Small Bullish or Bearish Candle (Day 2)
• Large Bearish Candle (Day 3)

The first part of an Evening Star reversal pattern is a large bullish green candle. On the first day, bulls are definitely in charge, usually new highs were made.


The second day begins with a bullish gap up. It is clear from the opening of Day 2 that bulls are in control. However, bulls do not push prices much higher. The candlestick on Day 2 is quite small and can be bullish, bearish, or neutral.

Generally speaking, a bearish candle on Day 2 is a stronger sign of an impending reversal. But it is Day 3 that is the most significant candlestick.

Day 3 begins with a gap down, (a bearish signal) and bears are able to press prices even further downward, often eliminating the gains seen on Day 1.


Evening Star Candlestick Chart Example

The chart below of Exxon-Mobil (XOM) stock shows an example a Evening Star bearish reversal pattern that occured at the end of an uptrend:



Day 1 of the Evening Star pattern for Exxon-Mobil (XOM) stock above was a strong bullish candle, in fact it was so strong that the close was the same as the high (very bullish sign). Day 2 continued Day 1's bullish sentiment by gapping up. However, Day 2 was a Doji, which is a candlestick signifying indecision. Bulls were unable to continue the large rally of the previous day; they were only able to close slightly higher than the open.

Day 3 began with a bearish gap down. In fact, bears took hold of Exxon-Mobil stock the entire day, the open was the same as the high and the close was the same as the low (a sign of very bearish sentiment). Also, Day 3 powerfully broke below the upward trendline that had served as support for XOM for the past week. Both the trendline break and the classic Evening Star pattern gave traders a signal to sell short Exxon-Mobil stock.

The Evening Star pattern is a very powerful three candlestick bearish reversal pattern. The bullish equivalent of the Evening Star is the Morning Star pattern

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Candlestick Charting - Volume 16 - Morning Star

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The Morning Star Pattern is a bullish reversal pattern, usually occuring at the bottom of a downtrend. The pattern consists of three candlesticks:

• Large Bearish Candle (Day 1)
• Small Bullish or Bearish Candle (Day 2)
• Large Bullish Candle (Day 3)

The first part of a Morning Star reversal pattern is a large bearish red candle. On the first day, bears are definitely in charge, usually making new lows.
The second day begins with a bearish gap down. It is clear from the opening of Day 2 that bears are in control. However, bears do not push prices much lower. The candlestick on Day 2 is quite small and can be bullish, bearish, or neutral (i.e. Doji).
Generally speaking, a bullish candle on Day 2 is a stronger sign of an impending reversal. But it is Day 3 that holds the most significance.
Day 3 begins with a bullish gap up, and bulls are able to press prices even further upward, often eliminating the losses seen on Day 1.
Morning Star Candlestick Chart Example

The chart below of the S&P 400 Midcap exchange traded fund (MDY) shows an example a Morning Star bullish reversal pattern that occured at the end of a downtrend:



Day 1 of the Morning Star pattern for the Midcap 400 (MDY) chart above was a strong bearish red candle. Day 2 continued Day 1's bearish sentiment by gapping down. However, Day 2 was a Doji, which is a candlestick signifying indecision. Bears were unable to continue the large decreases of the previous day; they were only able to close slightly lower than the open.
Day 3 began with a bullish gap up. The bulls then took hold of the Midcap 400 exchange traded fund for the entire day. Also, Day 3 broke above the downward trendline that had served as resistance for MDY for the past week and a half. Both the trendline break and the classic Morning Star pattern gave traders a signal to go long and buy the Midcap 400 exchange traded fund.
The Morning Star pattern is a very powerful three candlestick bullish reversal pattern. The bearish equivalent of the Morning Star is the Evening Star pattern

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How I Trade Breakouts

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Talking Points:

• Always wait for the current candle to close beyond the trendline to confirm the break.
• Enter into the trade when price retraces back within a few pips of the original trendline, trading in the direction of the original breakout.
• Set your Stop a few pips beyond the trendline and set your Limit at least twice as far as your Stop.

Step 1. - Locating the Trendline

As a review, a trendline is a line connecting two or more lows or two or more highs, with the lines projected out into the future. Traders than look at these projected lines and look for future prices to react around those levels.


Step 2. – Wait For a Confirmed Breakout

Next, we need to see how the price reacts to the projected trendline. There are two potential outcomes when price comes into contact with a trendline:

• The price will bounce off the trendline
• The price will break through the trendline

So we wait to see if the price does in fact break through the price. But we aren’t ready to place a trade just because the price breaks through the trendline. We need to wait and see if the current candle closes beyond the trendline. We require a candle to close beyond the trendline to confirm the breakout. This is a very important rule.


Check out the chart above depicting a trendline on a current USD/JPY Hourly chart. There were two times in the past week where this trendline was broken, but look what happened. They were false breakouts. Sellers were not able to keep the price down below the trendline and both potential breakout candles closed above the trendline. Had we sold at either of those two opportunities, we would have been crushed two times in a row. Something we definitely want to avoid.

So even though it is tempting to get immediately into a trade as price breaks a trendline in real-time, you would be susceptible to false breaks. Patience is a virtue.
Step 3. Set Up The Trade

Remember the first image I showed you of the GBP/USD Hourly chart? Let’s go back to that example because it actually ended up producing a near perfect breakout setup. Soon after that snapshot was taken, the GBP/USD fell and broke through our trendline with authority. A very short time after that, the Hourly candle closed below the trendline and confirmed the breakout as well. Once this happened, it was time to get to work to setup this trade.

There are 3 things we needed to do to execute this breakout trade:

• Set an Entry order to Sell just below the original trendline.
• Attach a Stop order several pips above the trendline.
• Attach a Limit that is as least twice as large as our Stop (increase your trading profitability by learning the importance of the risk/reward ratio).

There is a saying that goes “What once was resistance, can later become support. And what once was support, can later become resistance.” This is the mantra we rely on when setting an Entry order near the original trendline. We are looking for price to retrace back to the point of support/resistance it just broke through, and then continue back into the direction of the original breakout. Take a look at how the trade was setup below.


Our Entry order to Sell was placed a couple pips below the trendline, our Stop Loss was set several pips above the trendline (approx.. 15 pips from our Entry) and our Limit was set twice as far as our stop (approx. 30 pips from our Entry). Within the next hour, the price retraced back to the original trendline, and then move back in the direction of original breakout, exactly what we wanted.

So to recap, we were able to enter into a trade on a confirmed breakout, we were able to get in at a much more favorable price than entering the break in real-time, and we were able to set an extremely tight stop (read: lower our risk) beyond what should be a valid resistance level.
As it turned out, this particular trade was a success, but that doesn’t mean every trade will be a winner. However, you should take comfort in the fact that as long as you are using a 1:2 risk/reward ratio, you only need to be correct 33% of the time to break even. If you are right more than 33% of the time, you should be a profitable trader in the long run with this strategy.

Breaking Bad

Trendline breaks can be tricky to trade, but hopefully this article gave you a clear approach to mastering them. We've learned that you should always wait for confirmation of a break by requiring the current candle to close. We also learned placing our Entry order near the trendline will give us a better entry price and reduce our risk by allowing a tighter Stop. Setting our Limit as least twice as far as our Stop should also help shift the odds in our favor. Good luck with your trading!

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Trading Risk Management - Tight Stops

Price Bar Reversals (1 of 9) - Intro

Price Bar Reversals (1 of 9) - An Intro to a series discussing short term price bar reversals such as the bearish rejection, the bullish rejection, the open close reversal, the closing price reversal, the hook reversal, the key reversal, the island reversal and the pivot point reversal.