Trading is as simple as 1-2-3

Short AU +5 locked

Short EU +5 locked

Short CF +5 locked

Short GU +5 locked

Hi Guys......this post is in response to an enquiry from the HoLo thread. I hope it helps.

As Lem mentioned , the rules are pretty straight forward.

Sell.
H1 chart.
1: Bar #1 makes a new Daily High.
2: Bar #2 fails to make a new Daily High.
3: Enter trade short as price drops back over Open level of Bar #2.

1-2-3

Flip it for Buy.

It's that easy.

Now for a visual if that will make it any easier....




The above chart shows two setups. It also shows that 1-2-3's can happen at any time of the day.

Candle A is the first candle of the new trading day. It makes a new LOW for the day,

Candle B does NOT make a new LOW.....so it is a valid setup. Place a BUY stop order at the OPEN price of candle B with a STOP at the low of candle A (or a bit lower if you want). You may want to enter with a MARKET entry when price crosses back through the OPEN price of candle B if you don't want to use a BUY stop order.

Managing this trade will be down to the individual. There are many scenarios.
In this example, candle B moved about 10 pips from it's open price to it's high price. The STOP/RISK in this example is about 5 pips.
1) Take profit at 10 pips. This would give you about 2 X Risk in profit.
2) Move your stop to (BE)Break Even +1 pip when price moves in your favour by X pips.
3)Move your stop to BE + 1 pip and apply a trailing stop.
4) Take partial profit at X pips and let the remainder run.
The list goes on and on.....

It's the same with a SELL trade.

Did candle H make a new High?.....YES
Did candle I make a new High?.....NO.
Okay.....it's a valid setup.

Place a trade as price moves back through the OPEN price of candle I. Stop above candle H high.
Then manage the trade accordingly.

If you look at the candle from A through to H, you will see that there was NOT an opportunity to get on a SELL trade before we got to candle I. WHY NOT??
Simply because all the consecutive candles made new daily HIGHS as price moved up.
Example. ...After Candle C closed...candle D's price moved up and took out the high of candle C.........so there was NO valid SELL setup once a new high was made.

TooSlow has always advocated that you learn the method according to the rules FIRST. Then once you have sufficient experience, you can "make it your own".

You will see Hal7 is a regular contributor here. He has "made it his own".
Not an overnight thing though. If you went back to Hals earliest posts, he and Lem had a number of discussions about trade management, and Hal has obviously found what works for him. You will have to do the same, as the "trade management recipe" will be different for each individual.
You just need to put in the "leg work" as Hal has done, and come up with what works best for you. But again, learn the basics FIRST.

I hope that helps.
Cheers
Michael

Good job as always, Michael.

I could say one thing: Could you edit that above and add a second chart of the play but as a bar chart? Reason being, we all use bar charts for 1-2-3 and candles for HOLO.

Just a thought.

Yes good presentation Michael. The concept as stated is pretty simple and straightforward. The time spent in observing and applying will pay off. As Lem stated the bar chart has been the format, not a big deal but separates it from the hi-lo thread.

Managing the trade once in is where the only variance comes in and I have used many different approaches. It is just something to experiment with and match your style and risk taste. They all have there pluses and minuses. The only other variation I make is whether I want to enter the trade, primarily when the pair is on a run in one direction, that happens on certain days and news driven moves. But you have to be careful of over-analyzing also.

Short CA +5 locked I like it when that high lines up like this against a previous high. You see that action on long and short side with this pair today. Also have been experimenting with running a straight 15 trailer stop loss lately.

Long NZ +5 locked steaming along pretty good now, again line up fairly nicely on the bottom side. I am also in long on the same set up with GJ and AU.

Look at Uc last candle constantly is macking new Higer Lows

Michael, as always, your contributions are welcome and appreciated. Cheers, Mate!

THAT LUCKY CANDLE

Short JY +5 locked

USDCHF setting up.

I just shorted GU lem

Short GJ +5 locked

Doesn't everyone?