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How to use the 123 strategy effectively

  • #221
  • Dec 11, 2010 3:01am Dec 11, 2010 3:01am
I closed the GU long that triggered 5mins before mkt closed for +17

Cheers

P
Attached Image (click to enlarge)
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  • #222
  • Dec 11, 2010 3:09am Dec 11, 2010 3:09am
what iv done here is simply draw a 61.8% fib pull back on a new high starting from point A and noted the areas that would concern us

Traders often in an uptrend will have a strategy for buying the dips at these levels.

P
Attached Image (click to enlarge)
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  • #223
  • Dec 11, 2010 3:20am Dec 11, 2010 3:20am
here it is again on the daily

Hopefuly we have the 123 count all that is happening here is the following

 

  1. The price is up trending which means more buyers than sellers
  2. The price pulls back as people take profits and gives us a 1 at the top
  3. Others buy in now at this lower level and it rallies this gives us our 2
  4. But the buying cannot make a new high and it stalls this gives us our 3
  5. the buyers see this and all look to the 2 level to see if a lower low goes in
  6. It does and the old buyers now become sellers and push the price down
  7. This gives us our entry


Now couple that with the fact that in a down trend people often look to the rally at 61.8% level to sell more( our 3 level) and we now have more sellers pushing the price down to break the 2 level ( our entry) we now have 2 powerful price driven events which hopefully we take advantage of.

These events are shown nicely in the current 123 short on the daily ..TP not hit yet

3 things to look at on this chart

 

  1. In the uptrend all the yellow boxes are 61.8% levels
  2. The price at X tested the old low at 2 a classic support turning into resistance after all its a strong level this point ended the up trend
  3. . The blue line at X is around the 60% pull back level very close to the 61.8

Attached Image (click to enlarge)
Click to Enlarge Name: d fib.gif Size: 24 KB
  • #224
  • Dec 11, 2010 3:32am Dec 11, 2010 3:32am
the weekly and current trade on that time scale

The yellow boxes are 61.8% levels...we are currently at one of these levels and Im hoping for another rally to break the last high and drive through to my TP

P
Attached Image (click to enlarge)
Click to Enlarge Name: w fib.gif Size: 20 KB
  • #225
  • Dec 11, 2010 3:49am Dec 11, 2010 3:49am
Paulus

Thanks for your reply re sticking to targets and not exiting early. May I ask you what your hit ratio is?
  • #226
  • Dec 11, 2010 3:59am Dec 11, 2010 3:59am
its quite high i hit 75% - 85%

P
  • #227
  • Dec 11, 2010 9:54am Dec 11, 2010 9:54am
Good job Paulus for showing traders the simplicity of 1-2-3 tops & bottoms.

Imho the only set up you will ever need.

I trade the weekly and dailys from currencies to commodites to stocks/etf's and it is very, very reliable for showing it's hand at major trend changes.

Keep up the good work.


golferfx
  • #228
  • Dec 11, 2010 11:38pm Dec 11, 2010 11:38pm
Quoting golferfx
Good job Paulus for showing traders the simplicity of 1-2-3 tops & bottoms.

Imho the only set up you will ever need.

I trade the weekly and dailys from currencies to commodites to stocks/etf's and it is very, very reliable for showing it's hand at major trend changes.

Keep up the good work.


golferfx
Hey Golferguy:
Good to hear from you again, I'm still trying to win with the 123 pattern, good to see you back contributing.


JIm
  • #229
  • Dec 12, 2010 11:01am Dec 12, 2010 11:01am
Here is some additional pattern info that may help, or not....lol

2Bar reversal pattern
  • #230
  • Dec 12, 2010 12:49pm Dec 12, 2010 12:49pm
paulus
pm me please re a post on your mechanical divergence thread
sorry for intrusion
  • #231
  • Edited 5:59pm Dec 12, 2010 5:44pm | Edited 5:59pm
Quoting Paulus
I closed the GU long that triggered 5mins before mkt closed for +17

Cheers

P
Paulus, a question.. take a look at the last trade on your chart (GU friday,right before the market closed)...to get to the level 61, how did u do it?

did u count from 1 to 2 (from bottom to top)... or from 2 to 1 (top to bottom)

correct me if i'm wrong (never used Fib before)...i did it from bottom to top but the retracement never reached 61,8.

thanks.
  • #232
  • Dec 12, 2010 6:05pm Dec 12, 2010 6:05pm
Quoting ForexSV
Paulus, a question.. take a look at the last trade on your chart (GU friday,right before the market closed)...to get to the level 61, how did u do it?

did u count from 1 to 2 (from bottom to top)... or from 2 to 1 (top to bottom)

correct me if i'm wrong (never used Fib before)...i did it from bottom to top but the retracement never reached 61,8.

thanks.
Hello ForexSV....check out post #125 in this thread for some info that might help you with your question:

http://www.forexfactory.com/showpost...&postcount=125

Jeff
  • #233
  • Dec 12, 2010 6:26pm Dec 12, 2010 6:26pm
Hello everyone....OK sorry for two posts in a row...

So, it seems that the 1-2-3 is going very well...has anyone had any experiences with times that it has not gone so well, over say a two or three month period? I'm just curious to hear from others before I start to do a serious bit of manual backtesting, and if the answer is already out there, why re-invent the wheel? I mean, this is a rather mechanical system without much discretion (so it seems), and with all due respect to Paulus (and I certainly wish for his success to continue! ), it just seems a tad too good to be true.

Learning 1-2-3 has helped me to understand the markets...thanks for this thread!

Regards,

Jeff
  • #234
  • Dec 13, 2010 1:52am Dec 13, 2010 1:52am
Hi Paulus:
Do you wait till after the Asian Session to start looking for 1's, or if there is a 1,2 set up during the Asian Session do you wait for the end of the session to look for the 3? Hope that question makes sense.

Jim
  • #235
  • Dec 13, 2010 4:54am Dec 13, 2010 4:54am
Quoting Paulus
having good success with this in fact more so than any other system i have used or created in the past..

Its just price action but you need some rules mine are simple

[list=1][*]I start looking for 123 at 7am uk time on...not before[*]if we are going up in the Asian session I look for a short and visa versa[*]I always take trend reversals not continuation of trends[*]If I take a short 1st thing then the rest of my trades go long short long short etc[*]I must have more than 1 candle in between 1 and 2 and 2 and 3[*]The pull back or rally...
..
  • #236
  • Dec 13, 2010 10:40am Dec 13, 2010 10:40am
Set up 123, buy stop for 200 pips
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  • #237
  • Dec 13, 2010 12:38pm Dec 13, 2010 12:38pm
hi there every one ok?

today i catch only the first move of this huge push up on eur/usd does someone ride it all?


this post leads me to our exits.. I catch only the 100% distance from 1 to 2...

i trade most likely paulus I put the SL and TP and forget it until it's fullfill one of them... in this particulary case I almost got out but luckly got my 27pips... but if we improve this exit strategy that is wont be so rigid maybe we could multiply sometimes the profits... and the RR to up to 10/1 like todays moves

well I dont know if long term it works maybe someone with more experience tell me their opinion many thanks paul I love 123 it was the first way I begun to trade then I diverge to other systems but this one is beautifulll here is a picture of my 1h E/U today.


let's keep this thread going up in the right direction.

Luis cheers

i trade out side MT4 so I dont have the trade on the screen... nut i trade a micro live for now I only begun to trade real in august so no rush I go as I grow
Attached Image (click to enlarge)
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  • #238
  • Dec 13, 2010 2:37pm Dec 13, 2010 2:37pm
Quoting bigjim1958
Hi Paulus:
Do you wait till after the Asian Session to start looking for 1's, or if there is a 1,2 set up during the Asian Session do you wait for the end of the session to look for the 3? Hope that question makes sense.

Jim

Hi Jim

Good question that and one im often tempted with but to keep it clean I wait for the end of Asian to start the count

cheers

Pto jump
  • #239
  • Dec 13, 2010 2:40pm Dec 13, 2010 2:40pm
Quoting ForexSV
Paulus, a question.. take a look at the last trade on your chart (GU friday,right before the market closed)...to get to the level 61, how did u do it?

did u count from 1 to 2 (from bottom to top)... or from 2 to 1 (top to bottom)

correct me if i'm wrong (never used Fib before)...i did it from bottom to top but the retracement never reached 61,8.

thanks.
For long I go 2 to 1 that way I get the 100 200 300 etc above my entry which it is where it should be

cheers

P
  • #240
  • Dec 13, 2010 2:42pm Dec 13, 2010 2:42pm
only 2 trades today 1 on each EU and GU +30 and +14 just constantly moved up my 1 count after that with a 2 never being broken and a 3 never being formed

P
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