As a trader we often hear the term engulfing candle, or outside trading day very often, but how can that help make us money? Well first, we must understand that an outside day or an engulfing candle is simply a reversal bar on the chart. For example, if price reverses the prior day's candle in the opposite direction than we have an engulfing candle, or what we older traders would refer to as an outside day on the chart. Now it is important to understand that all engulfing candle formations are not created equal. While these chart patterns are extremely important, you will need to look at other factors on a stock chart to know if it is a really meaningful and powerful reversal pattern at hand.