Trading is as simple as 1-2-3

GU short took a hit on the first shot, but reloaded...

It might be telling you something...

Sorry 'bout that, p-p-p.

However, there was nothing about that set-up that would tell me to go short. Nothing.

Even taking my Supply+Demand info out of the equation, basic price-action gave no weight to a short move.







Even taking it down the time-frames. Nothing.





Hey, you live and learn. As I have said here and elsewhere many, many, times...It's only a mistake if you don't learn from it.

Flush it and move on to the next one.

Hi Lem, thanks so much for your detailed analysis, much appreciated.

Am I right in summarising that it was a valid 1-2-3 setup, but that there were basically no confluence looking at price-action, supply/demand etc? And we rather pass on certain 1-2-3 trades if we can't find any confluence.

Quoting lemercenaire

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{quote} Sorry 'bout that, p-p-p. However, there was nothing about that set-up that would tell me to go short. Nothing. Even taking my Supply+Demand info out of the equation, basic price-action gave no weight to a short move. {image} {image} {image} Even taking it down the time-frames. Nothing. {image} {image} Hey, you live and learn. As I have said here and elsewhere many, many, times...It's only a mistake if you don't learn from it. Flush it and move on to the next one.

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Hi Lem,
looking at your H1 chart, can you give some explanation on the tunnels you have drawn and how you get them? Are they to do with the HOLO system?

The second short seems valid.

Hi again.

Yes, it was a valid 1-2-3 set-up in the sense that there had been a new high and the next bar (at the time) hadn't broken that level.

However, one factor that it is worthwhile thinking about re 1-2-3 is that for instance, on the first bar of the day - what do you have? A new high and a new low. Right? Yes, so now an hour later, the second bar forms. You could and no doubt would, find yourself looking at a ''valid'' set-up. Would you be looking to trade that set-up?

Of course, you may get away with it but in general, you simply haven't enough information to form a solid opinion or representation of what price is actually likely to do.

You could go up a couple of time-frames, to the H4 and The Daily, where if these were both showing a strong directional bias, that could be useful information but in general, down on your H1, you can't see what's what yet.

What I'm trying to say is that although the base method is rock-solid and I swear by it, it would be disingenuous of me to say that there aren't ways that show up trades that are more likely of success.

I have never hidden the fact that I use external information - and my friend TooSlow is happy with that. It is, however, not my intention to go into a lot of detail that detracts from the thread's original direction.

The kind of basic stuff that can - and in my opinion should - be taken into account, is Price-Action on not only the H1 but on the Higher time-frames. That will keep you out of a very large number of false trades (and away from TooSlow's ''Freight Trains'').

Start there and work that into the method and you will begin to get there.

Hal also looks for certain ''shapes'' to his set-ups and if you look at his posted charts, then what that shape is is very evident.

TooSlow has narrowed his focus to a certain couple of pairs (as to a certain extent has Hal and even myself with my Indices). Doing this means you will begin to learn the ins-and-outs of how it behaves (my DAX and F40 are examples of set-ups that go against the rule and do actually kick off very early. This is just part of their behaviour).

They are Supply+Demand Zones.

I don't want to clutter up TooSlow's thread with a lot of additional ''stuff'', so what I would say is that if you Google ''What is Supply & Demand in Forex trading?'' or ''What is the difference between Supply and Demand and Support and Resistance'' or some variation on that, you will find all the detailed information you need.

Practice and learn how to draw the zones yourself and then you can switch to one of the indicators that work out there. Better to understand what your indicator is showing you than blindly following. That way will also mean that you can spot which ones work properly (a couple) and which ones are guff (the majority).

Lovely, clean bounce.Thanks to my friend Claudia for bringing the set-up to my attention!

Lem, again thanks so much for the detailed reply, all makes a lot of sense.

Entered long on EUR/GBP

Update:
Lot1: +5 pips
Lot2: + 6 pips, only just got stopped out

No worries - happy to help.

Nice bounce from demand, but this wasn't typical 1-2-3 trade right?

One thing you will have seen just happen on UC, is something we can work with.

It is often the case that we will see a move around the hour or so at the US Open that will reverse the direction of the UK morning session.

This may not go for a huge distance and often the direction will turn and continue on in the original direction but it is something to bear in mind.

I didn't go in on it, though of price had gone all the way to the Supply Zone, I probably would have.

Entered short on GBP/JPY

Update:
Lot1: +5 pips
Lot2: +6 pips, tried to ride it down

Lem, is it okay if I post some trades here, don't want to flood the thread, also don't want other members to copy my beginner trades :-)

Why not? Ah, I'm guessing because it didn't ''test'' the low?

Yeah, I suppose so but with all the added info, I just pulled the trigger as the bar opened. Got a little slippage but nothing major.

If price had continued to drop, then I would have faded the entry (or if I wanted to be less aggressive, closed at a stop and then re-entered when the chance came again).

Please post away. In fact, beginner posts are good to see, as it will help other newcomers feel they are less alone out there. So long as it is a 1-2-3, you're good to go.

Entered short on GBP/USD at 1.3895

Edit: Result
Lot1: +6 pips
Lot2: +1 pips

Managed to make back the 24 lost with UC from the last 3 trades :-)

Now that's a better choice.

If I could break down my process on that same move, I'd say that although there was info lacking on the H1...


...the H4 backs your play...


However, I would not be hanging around in the trade too long, as dropping it down shows price is trapped to an extent and the UK day is coming to a close...


Hope you got something out of it and didn't get spooked by the early reversal.