How to use the 123 strategy effectively

those who love to Trade 123 should take note of congestion and trade range that is when you will need a good view cus you will find alot of 123 in such market and you might get cut often with that..try read the Law of chart you will find out how to identify this pattern in 123 method.

cheers

Here is a PDF from Mark Crisp ..... He was giving these away so I don't see any problem with attaching it here..... It was a leader to get you into his mailing list for other products, so just ignore those and read the PDF it really is quite descriptive of the 1 2 3 method.

Here is a link to another 1 2 3 breakout trading method,Again.... just read the article, I do not advocate you buy anything from these guys it may also help to get this method to gel for you.

Here is another link...... 1-2-3-4 Forex Reversal Trading Strategy

I also have an ebook I found online quite a while back , however the file is too big to attach here. If you would like to receive it PM me with your email address and I will send it to you. There is no charge, I am not going to try and sell you anything nor will I put you on any mailing lists. Just trying to give you guys some material that may help bring this together for you.

Now this thought.......... in it's simplest form the 1 2 3 method is nothing more than trying to catch the momentum of a trend by placing buy orders at new highs and sell orders at new lows by doing this you can also catch the reversals.

Just some additional food for thought ......

Here is a link to Joe Ross's LAW OF CHARTS

Happy trading.

I have been looking at some of Paulus' charts....I thought I may have found one he might have missed....here is the original:

http://i13.photobucket.com/albums/a2...effbb/12eu.gif

...and then I wondered if the one in magenta would have also been valid:

http://i13.photobucket.com/albums/a2...ffbb/12eu2.jpg

....however, I remembered the L,S,L,S rule: "I take a short 1st thing then the rest of my trades go long short long short etc..."

Still, when we have a failed trade, I have assumed we then consider the direction of the fail for our next trade (why one sees on some occasions two shorts or two longs in a row in my data)...

I guess I'm trying to wrap my brain around what constitutes a "trend"...how long it might have to be to trade in the opposite direction...when I check out the MT4 charts before the first trade on this pic (shown incompletely), it seems to me that, during the Asian session, we are actually headed up, and that first trade is a continuation...

http://i13.photobucket.com/albums/a2...2010Wonder.jpg

....just trying to "get it".....

Regards,

Jeff

I know Paulus trades the L,S,L,S, method but I can't really see leaving a good trade on the table...... Catch each retracement on the way up and follow it with sells on the lows of the trip. The #3 spot on you magenta trade.

Do you see where it would have been picked up on the trip back south?
There are three traades on the downward ride you could have captured as well.

The easiest thing to do to help you visualize the trend is throw a 21 period MA on your chart..........
You can use this to help filter your trades.

Kinda like this..........

Looks like I missed labeling a buy at 3320

I have tried to read this Law of Charts, and I must admit....this whole Ross Hook thing has me a bit befuddled........but I will stick with it.....I totally agree with "donfriday"....that when the market moves into congestion/range we can get into trouble trading 123's.....of course Paulus solves this by only trading reverasals......but I totally agree with tradestar1.........I can not leave good trades on the table......after the reversal there are often good 123 sets up with the trend

So....I will put my thinking cap on and see if I can really "get" the rest of "law of charts"

Vantage who hosts the http://www.forexfactory.com/showthread.php?t=108544, higher low, lower high thread talks about entering before the break of the 2 point....and this is also mentioned in the Law of Charts

Lots of great stuff to learn.

PGPB

Here is this evenings trades so far.... as I type I just picked up the third position.
Now I admit the market is a bit thin this time of day but with good trade and money management these entries could go quite a ways.

Hi all,

Here's a trade from this evening. I closed +16 at the flag since there are thin markets. They should remain that way most of the week. Thought I'd post the setup to share with the thread. You may notice that my fib reads 38.2 where our dear colleague Paulus' would read 61.8. Don't be confused... the correct level is 38.2 and the retracement here is in fact 61.8 for the 1-2 swing.

-Joe

Stopped out but with an accumulated gain of 30.

Hello tradestar1....are your MAs the 50 sma, 10 ema, and 21 ema? Maybe not quite, but looks close...oh wait, a tight Bollinger band maybe? Yes, very nice 1-2-3 on th E/U tonight....Sundays are often very directional and fun to trade...no wonder OANDA has a 2 pip spread

http://i13.photobucket.com/albums/a2...1920100002.jpg

(oops sorry for the strange random yellow and black dots...I used photobucket's editing tool)

Regards,

Jeff

The cyan MA is a 24 SMA and the Blue bands are a 5 period and 0.5 deviation Bollinger Band

5 min tf 123 placed waiting to fill in the 2 to start the trade


update: it retraced to 61.8% fib on actual candle.... let's see...

http://1.bp.blogspot.com/_dswi7ZSR8G...10%2B1-2-3.gif
http://3.bp.blogspot.com/_dswi7ZSR8G...10%2B1-2-3.gif
Jeff,

it works along all currency pairs that are liquid, attached eurgbp and chfjpy charts for last week with a couple of trades highlighted. i've got 22 currency pairs from my broker and it's useful for all of them (though the wide spread ones such as cadjpy,chjpy,euraud where spreads are greater than 2-3 pips then should only look at longer time frames to consider the trade)

well the other trade had to be cancelled has we had a new HH now a new setup placed.. let's see....

or an alternative count

waiting for the 3 to complete the setup on 1h TF

just as a thought, why don't you guys look at 123's for reversals only if outside previous day High or Low ?

on the 1h TF chart is the LL of the day the point 1...

on the 5 min TF could represent a continuation of last weeks down trend.. after a lillte consolidation.. let's see...

probably because then it will be a continuation pattern of the break...if it forms within the previous days range then you're using the prior S/R as part of your entry