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How to use the 123 strategy effectively

  • #421
  • Dec 20, 2010 12:11pm Dec 20, 2010 12:11pm
Quoting Paulus
Im worried..please dont over complicate a simple count with loads of useless indicators..you end up with too many conflicting signals


I have devised many system based on indicators none are as reliable as taking reversal 123 counts dont worry about leaving pips on the table the secret is not to lose the pips in the 1st place by over trading

p
I agree with this...as Paulus also said earlier:
Quote
"The idea behind it is pure supply and demand .. I know why its happening not that a stoch is just OB or OS"
(post 28 in this thread)

So, I wonder....*IF* we have the wherewithal to look at other pairs beyond E/U and G/U (like A/U, USD/CAD, E/J, etc...), and if we "knew" our hit rate on those pairs was in the positive, and if our broker allows for scalable MM to achieve 5% (or 2% as pgpb suggested), would we not be best served scanning multiple pairs that have good directional bias for 1-2-3 opportunities?

Even at the five minute time frame, it is a situation where one quickly looks at the situation every 15 minutes or 1/2 hour, then goes back to what was being done beforehand (because using Paulus' rules, there will be at least five candles (25 minutes) between the formation of point 1 and point 3)...of course there is the notion of having to convert pips of the currencies to arrive at the desired MM...

It is kind of like playing online poker (something I have not done in a few years now...)...I knew players who would have something like eight games going at one time...some of them were quite good at it! Me, I could only handle about four games maximum, and I was "OK" at it...having looked at four pairs simultaneously, it is MUCH slower than playing four games of poker online....

Anyway, this is just more food for thought....I'm LOOKING at this as a possibility to make up for the fact I cannot watch the entire market...eager to hear comments!

Regards,

Jeff
  • #422
  • Dec 20, 2010 12:26pm Dec 20, 2010 12:26pm
Quoting ForexSV
Paulus... please, take a look at my chart...why didnt u enter at 123 in red...looks like it was a valid set up... but then, would u get stopped?
and only on second attempt the trade wd be profitable.
please, help me to understand it.
Thanks.

ur 123 count on that GU was the correct from those i saw above the first entry is where you placed your point 2 and sl should be at point 1 .

cheers
MY OPINION NOT FINANCIAL ADVISE
  • #423
  • Dec 20, 2010 12:29pm Dec 20, 2010 12:29pm
Quoting pres78
Keeping my eyes on both the GBP and EUR USD crosses for possible 1-2-3's to the short side... As you can see the EUR bounced perfectly at the DS1 level. Both pairs have room to the downside if the breaks do happen.
Since price is bouncing around I am also looking at some crude looking 1-2-3's to the upside also on the EUR and GBP...
Attached Images
Today's zone = Tomorrow's opportunity!
  • #424
  • Dec 20, 2010 12:30pm Dec 20, 2010 12:30pm
Quoting sidefx
I agree with Paulus, been stung too many times over-trading. GU and EU shorts similar to Paulus today, which set themselves up after the asian session long trendline breaks.

why is your point 2 at 1.5525 and not 1.5556?
MY OPINION NOT FINANCIAL ADVISE
  • #425
  • Dec 20, 2010 1:06pm Dec 20, 2010 1:06pm
Quoting ForexSV
Paulus... please, take a look at my chart...why didnt u enter at 123 in red...looks like it was a valid set up... but then, would u get stopped?
and only on second attempt the trade wd be profitable.
please, help me to understand it.
Thanks.
I did enter 123 in red with stop loss 1pip above the 1 so im not stopped out

cheers

Paulus
  • #426
  • Dec 20, 2010 1:11pm Dec 20, 2010 1:11pm
Quoting lmgp00
well I think 3 is placed so buy stop is place 1 pip above 2 let's wait now...


paulus please feel free to coment or to give some recomendations ... i'm here to learn thanks for all....



buy the way 1 is already placed on the 1h tf too.

cheers
Hi

I look at all charts and i have a simple rule .. if you look at all the systems and threads iv started there is one thing in common you look at the chart and its easy on the eye...it makes trading simpler .. I like black and white logic I dont like grey logic red light green light...

I mean no disrespect what so ever by my next few words but i find it difficult to look at your chart and see clearly what is going on..I have to work hard to see the price swings and get distracted by indicators they you have as my mind logically tries to work out what they are telling me

I hope you dont mind me saying

Paulus
  • #427
  • Dec 20, 2010 1:29pm Dec 20, 2010 1:29pm
My GU trade is now pulling back my stop is set at 1 pip above point 1 and I have 5% mm in place

My UR hit its short TP and I know have a 123 in place for a long which will trigger if it hits 1.3131

My stop loss could be 300 pips if I risk 5% of a $5k account then my $ risk is
$5000 x 5 % = $250

1mini contract is $1 per pip on my 300 pip SL this will result in me losing $300 ( $1 x 300)
too much .....MM fails ........and I cannot trade 1 mini contract

A macro contract is $0.10 per pip

1 contract on my 300 pips stop loss is $0.10 x 300 = $30 per contract

Therefore

My max loss of $250 divided by $30 loss per contract = 8.3

I can trade 8 macro contract if my 300pip stop is hit I loss $240

I have complied with my MM

ITS not the value of your Stop loss that matters ...its the pip value of the contracts you trade and the risk per trade you are comfortable with



Same example

5% of my bank is $250

My stop loss on this example is now only 10 pips

10 pips on a main contract is worth $100

The calculation is $250 max loss divided by $100 = 2.5

I can trade

2 main contracts at 2 x $10 x 10 SL = $200

Leave me $50

1 mini mini contracts at $1 a pip on 10 pip stop = $10 per contract

remaining $50 divided by $10 per contract = 5 min contracts

On this trade i can trade 2 main and 5 min contracts if my 10 pip stop loss is hit I lose $250 5% of my account balance

Dont sweat about stop loss sizes

a 300 pip loss or a 10 pips loss should result in the same loss

P
  • #428
  • Dec 20, 2010 1:33pm Dec 20, 2010 1:33pm
I traded the E/$ today with an entry at 1.3130, +25 pips. Only trade of the day. Paulus, thanks for your contribution to this thread...nice job all around from you.
  • #429
  • Dec 20, 2010 4:43pm Dec 20, 2010 4:43pm
ok closed the gu trade just now for -15 at 1 point was up 40 but rules are rules


No other signals triggered

cheers

P
  • #430
  • Dec 20, 2010 5:34pm Dec 20, 2010 5:34pm
Quoting Paulus
Hi

I look at all charts and i have a simple rule .. if you look at all the systems and threads iv started there is one thing in common you look at the chart and its easy on the eye...it makes trading simpler .. I like black and white logic I dont like grey logic red light green light...

I mean no disrespect what so ever by my next few words but i find it difficult to look at your chart and see clearly what is going on..I have to work hard to see the price swings and get distracted by indicators they you have as my mind logically tries to work...

hi paulus no i dont mind nether i see no disrespect on your coments... my goal is to have a cleaner chart but for now that line helps me a lot cause is a mtf line that shows me the current trend on the 5 min chart is a mtf MA of the 60min and on the 1h chart is a mtf MA of the 4h, that us just to show me the current trend... the indicator below is usefull as you have time of candles to close spreads, swaps, buy/ask... just a gadget more then a indy ehehe


but please coment on those graphs and no only the graphs but also the tecnique applied... i'm only a noob here as said i begun trading on summer so still much to improve... and any teachings are always ALWAYS good... even if it is to highligh my errors no problem on that we have to learn some how.

thanks

PS- the same i say to paulus i say to all users here of thread if we provide a discusion all of us will learn something thanks ..

cheers Luis.
  • #431
  • Dec 20, 2010 5:38pm Dec 20, 2010 5:38pm
so to clear up the analise on my charts here is my setup i will explain it so it should be easier for you guys to help me ...


in the chart below the are only 3 indicators :

1 zig zag indicator (5,2,2)
2 multi time frame MA set to see the 60min/240min TF
3 a grid builder on 5 min it draws a line every 20pips interval and on 1h 50pips intervals ....


all my graphs are going to use only these indicators plus some trend or S/R line so that can be easyer so you can help me

thanks for all.


PS recomendations and advice are always welcome.



PS2 i'm experimenting the 123 concept on renko bars (10pips renkos) if you want i can post the results achieved on renko im only using E/U just testing...
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  • #432
  • Dec 20, 2010 5:41pm Dec 20, 2010 5:41pm
Quoting Paulus
ok closed the gu trade just now for -15 at 1 point was up 40 but rules are rules


No other signals triggered

cheers

P
Hi Paulus.....

Would you post a chart of those trades please, I am not sure where you lost the 15 pip on the GU.
Thanks
  • #433
  • Dec 20, 2010 5:43pm Dec 20, 2010 5:43pm
Quoting pres78
Since price is bouncing around I am also looking at some crude looking 1-2-3's to the upside also on the EUR and GBP...
I took the GBPUSD trade on the break of 5519 level... It only climbed to 5530 and my target was 5539 (150 target for 50 fib retrace). 2 reasons I shouldn't have taken this trade;

1. Messy looking 1-2-3 pattern + very ranging PA
2. This price level represents the 50 fib level of the daily H/L range (current daily pivot level for Tuesday) and had proven to be a good resistance level all day. I should have waited for a break on the 5m or 15m to create a new high and redrew my fib to start again with the count.

I got stopped out by the way at -50 fib level at 1.5499 for -20...
Today's zone = Tomorrow's opportunity!
  • #434
  • Dec 20, 2010 6:17pm Dec 20, 2010 6:17pm
this is one Trading range and where most of 123 count dont work..indicator is good and not good no idea is natural if you want to use indicator you should master it and go with what work best for you.
my indicator tell me when to stay out the market and when to look for possible reversal.
only focus on 15min tf for every entry,
Attached Image
MY OPINION NOT FINANCIAL ADVISE
  • #435
  • Dec 20, 2010 7:43pm Dec 20, 2010 7:43pm
Quoting pres78
I don't normal take 1-2-3's this early but I am glad I did... EURUSD already hit the 200 fib level, I had my SL at the 0 level since it was a range looking formation. I took the same set-up on GBPUSD but it is not moving as quick. I will move my trade to BE once I get up past 38.2 level.

Maybe it work like that today but not everyday, there was no 123 low on both chart you post which should give you entry..
MY OPINION NOT FINANCIAL ADVISE
  • #436
  • Dec 20, 2010 7:48pm Dec 20, 2010 7:48pm
Quoting donfriday
Maybe it work like that today but not everyday, there was no 123 low on both chart you post which should give you entry..
What do you mean by 123 low which gives entry? I do not follow what you are saying.
Today's zone = Tomorrow's opportunity!
  • #437
  • Dec 20, 2010 7:50pm Dec 20, 2010 7:50pm
Quoting ChinaWombat
http://1.bp.blogspot.com/_dswi7ZSR8G...10%2B1-2-3.gif
http://3.bp.blogspot.com/_dswi7ZSR8G...10%2B1-2-3.gif
Jeff,

it...
Thanks much ChinaWombat! I appreciate the info...and thanks for explaining the 8:7 ratio earlier...good trading to you...

Regards,

Jeff
  • #438
  • Dec 20, 2010 7:53pm Dec 20, 2010 7:53pm
Quoting pres78
What do you mean by 123 low which gives entry? I do not follow what you are saying.

123high is sell setup and 123 low is buy setup we also have congestion and trading range or TTE traders trick entry of this method in LAW of CHART.

on your previous post you mention you dont trade 123 this early but you happy you did. so i am wondering how you got to enter that trade you mentioned.
MY OPINION NOT FINANCIAL ADVISE
  • #439
  • Dec 20, 2010 7:58pm Dec 20, 2010 7:58pm
Quoting donfriday
why is your point 2 at 1.5525 and not 1.5556?
...was looking for a short setup after the trendline (formed pre-Frankfurt/London) was broken. Price went on to print the swing low ('2') at 5525.....why would it be at 5556? Please post a chart with your reasoning and then perhaps i'll understand your query.
  • #440
  • Dec 20, 2010 7:58pm Dec 20, 2010 7:58pm
Quoting donfriday
123high is sell setup and 123 low is buy setup we also have congestion and trading range or TTE traders trick entry of this method in LAW of CHART.

on your previous post you mention you dont trade 123 this early but you happy you did. so i am wondering how you got to enter that trade you mentioned.
I removed my post since you say they are not 123 trades and I agree that they aren't prefect, pretty set ups but I had a low point 1, high point 2, retrace and breakout which is what I traded.

Guess it may have been more of a range breakout from between 61.8 and 100 fib levels.
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Today's zone = Tomorrow's opportunity!
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