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How to use the 123 strategy effectively

  • #281
  • Dec 15, 2010 4:05am Dec 15, 2010 4:05am
stoped out .... it happens live with it waiting next setup
  • #282
  • Dec 15, 2010 4:13am Dec 15, 2010 4:13am
Quoting lmgp00
stoped out .... it happens live with it waiting next setup
Well done for posting your live trades, not many people are prepared to do this.
  • #283
  • Dec 15, 2010 4:17am Dec 15, 2010 4:17am
we have to be prepared to lose sometimes ...
  • #284
  • Dec 15, 2010 4:17am Dec 15, 2010 4:17am
potential 1-2-3 on usdchf, 3 was .786 of 1-2
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Catching a falling knife, no, I'm just trading the Gartley!
  • #285
  • Dec 15, 2010 4:20am Dec 15, 2010 4:20am
1hr doji so bounce up may have halted. 15 min hammer could be a problem. This 1 2 3 set up took out the hammer low. I look for the set up candles to have little/no lower wick when selling and for price to go 1 pip odd below the set up candle.

The indis are Supertrend and BBMACD settings as per another of Paulus's threads. IMHO if you want to trade 1 2 3 set ups in trend thats a great way to start.
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  • #286
  • Dec 15, 2010 10:09am Dec 15, 2010 10:09am
Hi,

Would like to ask.. if this EUR/USD ... setup of 123... it is correct ? since I found got 2 possible setup.. either its buy or sell..


http://i55.tinypic.com/2v1ahyw.gif


waiting for comment...

Thanks,
  • #287
  • Dec 15, 2010 10:16am Dec 15, 2010 10:16am
...this is the EU short on the 5min in play at the moment...which is nested within the short signal generated earlier after the long hit 1:1 target and printed today's swing high.
Attached Image (click to enlarge)
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  • #288
  • Dec 15, 2010 10:40am Dec 15, 2010 10:40am
Quoting Saidar
Hey there everyone,

What is the best way to use the 123 system, in terms of entry, exit, take profit and stop loss?

I think the 123 strategy is a great system but I cannot seem to make a steady profit with it, I keep losing as much trades as I win, and sometimes lose more than I win.

Would appreciate it if anyone can help out this noob

Thanks!

Joe Ross himself dont trade this method without other indicator and he was very discipline with it...I have read his books Law of chart and still add this method to my trading style profitunity chaos trading.
you need an indicator which can help you identify trend reversal and bull or bear flag, 123 entry is counter trend but Ross Hook is a confirmation if you need help on this pm me.
cheers Don
MY OPINION NOT FINANCIAL ADVISE
  • #289
  • Dec 15, 2010 10:44am Dec 15, 2010 10:44am
Quoting sidefx
...this is the EU short on the 5min in play at the moment...which is nested within the short signal generated earlier after the long hit 1:1 target and printed today's swing high.
...and out for a stress free +30. Love it
  • #290
  • Dec 15, 2010 12:12pm Dec 15, 2010 12:12pm
Quoting donfriday
Joe Ross himself dont trade this method without other indicator and he was very discipline with it...I have read his books Law of chart and still add this method to my trading style profitunity chaos trading.
you need an indicator which can help you identify trend reversal and bull or bear flag, 123 entry is counter trend but Ross Hook is a confirmation if you need help on this pm me.
cheers Don
Hi Donfriday

It would be great if you could post on the thread. Those following this thread are very interested in the 123 method.

We have Paulus who trades 123 on reversal....we have Vantage who trades 123 with the trend (correct me if I am wrong here guys).......so any other input is hugely welcomed.

PGPB
  • #291
  • Dec 15, 2010 1:08pm Dec 15, 2010 1:08pm
quite a tough day today

Although I dont let it get to me..once TP and SL are set I walk and wait

EU +22-59( ouch) +41

GU -45 +25

looking to long both but no set up yet

P
  • #292
  • Edited 2:08pm Dec 15, 2010 1:51pm | Edited 2:08pm
Quoting Paulus
quite a tough day today

Although I dont let it get to me..once TP and SL are set I walk and wait

EU +22-59( ouch) +41

GU -45 +25

looking to long both but no set up yet

P
Paulus... can you post a chart where u got -59. i see one trade, you went long ?

also, is your position (pip value) always the same... or you change it when you see higher number of pips in SL ?

thanks.
  • #293
  • Dec 15, 2010 8:08pm Dec 15, 2010 8:08pm
Quoting ForexSV
Paulus... can you post a chart where u got -59. i see one trade, you went long ?

also, is your position (pip value) always the same... or you change it when you see higher number of pips in SL ?

thanks.
see Paulus post 116, all explained there

the reported pips made should really be qualified against risk eg if two trades are made and 30 pips and 60 pips are made but R:R is 1:1 on both then you really should multiply the pip by the position size to get the 'real pip' count.

so if 1st trade is a 30 pip risk per lot, and 2nd trade is 60 pip risk, but both have same risk per account value (5% for Paulus for example) then
you're trading 0.5 lot for the second trade.

It's a bit complicated but at least we compare apples with apples. Making 25 pips versus making 250 pips is a meaningless unless you know the position size and R:R.
Catching a falling knife, no, I'm just trading the Gartley!
  • #294
  • Dec 15, 2010 8:18pm Dec 15, 2010 8:18pm
entries on both conservative and aggressive approach
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Catching a falling knife, no, I'm just trading the Gartley!
  • #295
  • Dec 15, 2010 8:21pm Dec 15, 2010 8:21pm
overnight entry
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Catching a falling knife, no, I'm just trading the Gartley!
  • #296
  • Dec 15, 2010 9:31pm Dec 15, 2010 9:31pm
OK, the March results are in:

Total pips: +402.6
Pips per trade: 10.6
Pips per day: 17.5
Hit rate: 23/38 for 60.5%

Here are the rules again:

Inserted Code
- 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 from 2 to 3 must reach the 61.8% of the 1 to 2 move
- My stop loss now goes 1pip below or above 1
- My TP is always the distance from 1 to 2

I added a ninth rule:  Enter one pip above/below the trend on an entry,  exit one pip above below exit on a stop loss.  Paulus has mentioned this  in some other posts.  Also, I did not count ANY Asia action...the start  times listed in the spreadsheet are the point 1 start times...

Lots of drifters this month, and I added some notes to include what seems to be another rule....Paulus will close if in profit at the end of the US session...it seems to me for this month, it was likely better to hold into Asia, however, the end results do not change all that much...the basic premise survives!

I also found this month to be difficult many times to find 1-2-3 trades to fit the rules....many close calls, and indeed I fudged two of them ever so slightly (see Excel notes)...

The picture becomes clearer with this strategy, for three months of data, it looks very promising...still, this is only about 110 trades, and probably not enough of a data sample yet....even a years worth (roughly 450 or so) might not be enough statistically speaking, and while I hate to be a "doubting Thomas", I will devote a post in the near future speculating when this method may run into trouble....

Regards,

Jeff
Attached File(s)
File Type: zip 123 MT Mar 2010 Study.zip   3.3 MB | 401 downloads
  • #297
  • Dec 15, 2010 11:49pm Dec 15, 2010 11:49pm
Quoting stljeffbb
OK, the March results are in:

Total pips: +402.6
Pips per trade: 10.6
Pips per day: 17.5
Hit rate: 23/38 for 60.5%

I also found this month to be difficult many times to find 1-2-3 trades to fit the rules....many close calls, and indeed I fudged two of them ever so slightly (see Excel notes)...

Regards,

Jeff
keep up the good work,

You don't need to count the pips, unless they are standardised per R:R.
All you need is 60.5% with R:R = 1 and you have a pretty profitable system. Net 8 trades (23 winners - 15 losers) * risk capital% gives you a raw 16% return for the month if you risk 2% per trade, or a nice 40% if you're following Paulus risk allocation less slippage. I know a few fund managers that would be happy with that for the year, not just a month!
Catching a falling knife, no, I'm just trading the Gartley!
  • #298
  • Dec 16, 2010 2:42am Dec 16, 2010 2:42am
first signal long i'm in lets see entry on 5 min confirming the entry gve on 1h chart let's see...
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  • #299
  • Dec 16, 2010 3:55am Dec 16, 2010 3:55am
I like Paulus' idea of trading 123 reversals rather than continuation. To help qualify this, i'm experimenting with the use of trendlines pulled from the previous 2 swings.

Looking at the current EU 5min, the trendline supporting longs has now been breached so we're now waiting for a valid 123 short.

Just some food for thought.
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  • #300
  • Dec 16, 2010 4:15am Dec 16, 2010 4:15am
Quoting lmgp00
first signal long i'm in lets see entry on 5 min confirming the entry gve on 1h chart let's see...
Hi Imgp

Waiting for the break of 2 point in and around London open could be dangerous. Entry at 3225 would have given better chance to at least get to BE. Entry at close of 1st positive close candle is an accepted method of trading 1 2 3's (when buying of course).

London open is notorius for head fakes.
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