1 2 3 Strategy explained

hello and thanks for info what kind of ea u used

My first post on FF and doing that in a Nice thread too...Simple yet highly effective method...

I trade similar way and have 4 different pattern of this change in trend orientation principle.....

Hope to give more contribution on live trades in the weeks to come...

We like to see, thanks!

Regardes

Hello, thank you and thank everybody for the interest!

Actually the EA viewable on my screenshots is nothing but a little ea i've made to manage tp and sl on all opened positions of a given symbol, usually i open multiple positions and when i need to modify the tp or sl of all the positions i just input the value in the ea that modify it on all positions.

I'm attaching it here, maybe it can be useful for somebody.

Thanks again

Hello, i was looking this thread and the message on it.

Actually i think all the informations i've putted here can be totally misunderstood, i'm talking about the 1-2-3 pattern.

This pattern (1-2-3, a-b/c-d, "M", "W") is nothing but price that break a previous support/resistance.

Price continuously break supports and resistances, it's how market moves.
It do this kind of game in the tick charts, in the 1min, 5min, 15min etc. till monthly chart.

We take the break of a previous support or resistance as a trading signal, but the break itself is nothing of successful, actually i think if we take every break we have exactly 50% success or even less, and our overall profit will be a big loss.

The key point of the profitable trading is go with the flow.

The market have only 2 behaviours:

1) Expansion
2) Contraction

It's like a breath: In and Out.

I call those phases Accumulation (Contraction), and Distribution (Expansion).

This is the first concept we should understand in order to go forward.

Market move in waves, if we have a good up impulse/distribution wave, soon after an accumulation wave will follow.

It is in this exact phase that we look for a break, a break that will indicate that the accumulation phase is finished, and market is going to distribute again.

When i've started trading again some months ago (i was in pause for one year) i was accumulating my positions with the market, not waiting for the break at all.
And it was working wonderfully!
The problem with such kind of trading style is that you never know what's going to happen, sometime market accumulate too much and the accumulation phase turn to be a new distribution phase (and of course you find yourself with a big exposure in the wrong way), of course then you have a good opportunity to exit in the next accumulation phase (and maybe reverse the trades), but there is still this kind of randomness.


I've found that if instead of open multiple positions in a retrace/accumulation, we wait... we wait for the break, then we have a good stoploss level (good compared to the potential target), and if the market structure in the break moment don't offer us a good Risk-reward ratio, we just wait for a new accumulation phase on a lower fractal, that will give us best R:R ratio and the opportunity to enter the trade with a huge exposure, and absolutely limited risk.

This is the concept i'm trying to explain, don't concentrate on the pattern itself, look at the bigger picture, and try to go with the flow.

After my last thinkings, i've decided to make a video during my trading, tomorrow.

It will be an experiment (useful or not?), and surely an interesting experience.

Hello,

In this little article i want to write down some personal thinking about psychology and losing streaks.

Every trader have to deal with losing streaks, and in my opinion they are very dangerous because they activate a natural mechanism of desire/need of recover the losses, a mechanism that can lead an account to 0 or near that.

The mechanism is pretty simple, we all look for have profits from trading, and when we have a losing trade/streak we burn our hard earned past profit, and what we look for is recover it.
This desire/need of recover do inevitably halt our concentration and our judgement about the market, let us take riskious trades (guess what will be the result of such trades!), and the result is a nightmare, a feeling of disorientation and confusion.

How to deal with losing streaks:
It is important to remain concentrated in the present moment, the last profits or losses are nothing we can recover or modify, it just belong the past and nobody can change the past.

You have to trade thinking about the present moment, the less you think about the past/future and the more you will be centered on the present moment, having the energy to make great judgements and great trades.

The recovering of the previous losses will happen naturally, it may need a very little timespan or a bigger one, but this really should not be important at all, the important thing is to stay in the present and enjoy the present trading.

The only way to deal with losing streaks/trades is to accept them, learn what we can learn (there is always something to learn from a loss or a serie of losses), and let them go.

I hope this little article can help somebody, thank you very much for reading!

indeed, very helpful article, I'll try to not think about my previous losses,
your thread improved my trading style significiantly and only psychology issues keeps me from becoming a successful trader,

Hello,

With the markets closed and some free time in this nice weekend, i've decided to open the chart and spend some time looking my trades of the past week, there is still a big question not yet answered, and it's about: momentum.

We all know that a good trend/wave start from a breakout, this thread is about "1-2-3" or "M" or "W" pattern, that is nothing but a breakout entry strategy.

A breakout without momentum is nothing but a sure loss, our job so is understand what, where and when there is momentum.

There is no way to be 100% sure about it, but i've found that trendlines can be of help.


A picture worth a thousand words:

http://warnsoft.altervista.org/imgs/d.gif

http://warnsoft.altervista.org/imgs/e.gif

The above 2 pictures are about breakouts with a stable momentum (the price remained above the trendline).


Below, a loss of momentum:
http://warnsoft.altervista.org/imgs/f.gif

In those situations, what happen usually is that price come back to make a new low after the "momentum-lacking breakout", that new low is necessary to find new buyers, and continue the uptrend.
http://warnsoft.altervista.org/imgs/g.gif

Instead, if in the higher fractal we are in downtrend (so the current uptrend is nothing but a retrace of a bigger downtrend), we'll see that the failed buy-breakout is nothing but a point "3" of a bigger sell pattern:
http://warnsoft.altervista.org/imgs/h.gif

And if the new new sell pattern don't have the necessary momentum, another failure can be expected, and what's the situation on the higher fractal? Is there a good momentum?
http://warnsoft.altervista.org/imgs/i.gif
Price make a pattern failure after another, going to an higher and higher fractal, this is where trendfollowing systems give losses, and of course breakout trading give lossess too.

So, with a simple trendline we can understand when a breakout is not going to be followed by momentum, even before it happen.
The usual strategy is to look at volume, however volume in the spot market is useless because calculated in a non-sense way, so we better find other ways.

Still, there is no 100% sure thing in trading, and the market matrix is soo complicated that i really doubt a trendline can make a difference, but at least can help us stay out from clearly losing breakouts, the ones with good momentum instead, can be winners, but again it's absolutely no 100% sure.

I am free to critics or disappontments, if you feel there is something wrong in my theories/ideas please write it down on a post, it would be very useful!

I am still thinking about making a good video of a trading session where all those ideas are applied to the real market, maybe i'll do it this new week, thank you!

Nice thread tunera,

I like what you said about pattern within pattern,
very strong idea when you apply it with the correct MM.

Also pattern 1,2,3 or W&M just an idea for entry,
beginning of a trade and the rest happens after its more important.
Maybe a bit more about your MM.

Nice ideas!
thank you

Hello Tunera

This thread is exactly what I am looking for.....I want to study these 123 patterns or W and M patterns as they are sometimes called.

Quick question.

If one is trading a M pattern (looking to go short when the "2" is broken) does it matter if 3 is higher than 1? In some of your examples 3 is higher than 1 and in others 1 is higher than 3

Another question, and this one is maybe harder to phrase in words......I can see patterns in the charts where there are lots of bars between 1 to 2 and between 2 to three (for example there could be twenty bars between 1 to 2 and another twenty or thirty bars between 2 to 3, and then another fifteen bars before 2 is broken........but I am assuming the pattern can be much smaller with only two or three bars between 1 to 2 etc etc
Is the 1,2,3 pattern equally valid on a much smaller scale?

I hope the second question is understandable.

PGPB

dunno how some guys claim to be profitable from this method.

Hello, usually when the 3 point do not broke the 1, the pattern looks more promising (we look for an inversion with this pattern, so if the 3° point is not strong enough to broke the 1° one, it's a good sign), however many times even if 3° point broke the 1°, the pattern is still good, and some time when 3° don't broke 1°, the pattern may fail (it may fail in everycase!), but yeah if the 3° point don't broke the 1°, the PROBABILITY of success are much higher.

I like very much your second question, of course when price go from 1 to 2, it do it creating a little 1-2-3 pattern inside the bigger 1-2, when the little 1-2-3 pattern is broken a new little pattern is created from 0, going in the area of the bigger 3, etc. Every time price move from one point to another, it move doing little waves, every little wave have up and down, and between those up and down there are other little waves etc.
So, of course patterns are valid on each scale.

The difficulty of this game is dictated exactly by this fact, most of the time we may have a pattern that tell us to sell, inside one that tell us to buy, inside one that tell us to sell, inside one that tell us to buy... etc..
The question is, which ones are going to give bigger profit? If the buys patterns give profit, the sell ones will probably give a few losses, or sometime there is a good volatility and a structure good enough to let all the patterns give profit, or sometime the market is soo liquid and choppy that all the patterns give loss (if traded with the 2-point breakout).
Yes they are all valid, but only a few are very good, how to spot them and filter the bad ones, i'm still working on it.

What i've found to give a good help is:

1) take the ones with the trend. (for example on a uptrend we will look for 123 buy patterns, when price is on a retrace).
2) if we take the ones countertrend, take them on overbought areas (in case of uptrend).

Everyone's different.

And it's not 100% the pattern, the trader chooses which 123s or M/Ws to take (the only difference is the former has a LH and the latter has a HH). Nobody's gonna make money taking every 123/M/W they see.


Some 123 traders will say that the pattern is invalid if 1 is breached by 3. If that is the case you have a M/W pattern. When this happens, I like to wait for 2 to be broken and then retested.

Damn straight dude, awesome post.

The Law of Charts

TTE

Edit:

Hey Tunera I hope you don't mind my adding some reading material to your thread.

Your answer is much appreciated.....and understood.
I will spend more time studying the thread.

Best wishes

http://warnsoft.altervista.org/imgs/34.gif

Trade taken right now, eu 1min chart.

A 1-2-3 pattern (the broke of 2 was a sign that the current uptrend-retrace was finished), the second 1-2-3 pattern was very little, but the RR offered was much good.

(Thanks for adding some material, i invite everybody to post everything inherent to this subject, the more we learn the better it is!)

http://warnsoft.altervista.org/imgs/34a.gif

And here another trade, right now