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How to use the 123 strategy effectively

  • #561
  • Dec 27, 2010 9:31am Dec 27, 2010 9:31am
Looking to trade the second breakout as shown... Sort of a Ross Hook (maybe not fully clear on these yet...) with a break out, retrace and a new point 2 and 3 in place. See what PA brings... for this one I will use point 1 for SL and -100 for TP for 1:1. Thin markets and crazy PA so I will keep a close eye on it if I get into profit.
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Today's zone = Tomorrow's opportunity!
  • #562
  • Dec 27, 2010 10:54am Dec 27, 2010 10:54am
Quoting Paulus
I am short EU and GU

GU from 1.5423 I actually got to 1pip of TP and then it rallied slightly

EU short from 1.3148 and bumbling around just in profit

will answer question on MM a little later

cheers

P

Closed GU for +27 EU still short

P
  • #563
  • Dec 27, 2010 2:37pm Dec 27, 2010 2:37pm
Quoting Paulus
Hi Jim

If I come into the market at midday for example all I simply do is look for the last 123 signal and see if its in play

In other words if I see a qualifying short that triggered 30mins ago and it is still active ie no tp or sl hit then I have to wait until that signal has completed

So if its a short and it loses it means the up trend is still in place so I would them look for a short

If it hits its TP I look for a long

So rather than determine trend I look for the active signal

cheers

Paulus
Hi Paulus:
Thanks for clearing that up, I'm sure that helped a lot of people along with myself. Thanks again for everything that you do to help people.

Jim
  • #564
  • Dec 28, 2010 6:39am Dec 28, 2010 6:39am
Quoting Paulus
Closed GU for +27 EU still short

P
Yest closed when EU hit TP for +16

Today

EU +21 ...1 in place for a short
GU +22 .. 1 in place for a short

P
  • #565
  • Dec 28, 2010 7:04am Dec 28, 2010 7:04am
Quoting tradestar1
Hi Paulus,
Would you elaborate on your style of MM?
Thank you.

With a fixed TP and SL you have to be careful when working out your stake or contracts traded per trade

here is an example

you get 3 trades on EU for +10 which win = 30 pips
1 Trade on GU which loses 40 = minus 40 pips

Strike rate 75%
But lost 10 pips

Using the MM i use using the above each win or loss would result in the same financial loss.

So running the example again

you get 3 trades on EU for +10 which win = 30 pips
I get 3 x wins at 5% of account balance = 15%


1 Trade on GU which loses 40 = minus 40 pips
I get 1 x loser at 5% of account balance = 5%

Over all on the day a 10 % gain

When trading across several pairs with different $ values you have to be careful

trading is not just about strike rate its also about making money
using spread betting companies to trade through using MT4 charts I have 1 very good advantage

I can trade £10 a pip across all currency swaps and each pip will be worth the same...unlike trading through a forex broker

Example

EU big move from 1 to 2 so TP large and SL large

lets say 100 pips
If have 20k and I want o risk my max 5% then on this trade I risk 5% of 20k = £1000

My stop is 100 pips I can lose £1000 so the calculation is 1000/100 = £10 per pip

the trade loses I lose 100 pips SL x £10 per pip = minus £1000

Account balance 20-1 = 19k


Straight away a trade triggers on GU

This time 1 count to 2 count is only 20 pips so SL 20 pips TP 20 pips

Account is 19k x 5% = £950 risk

SL 20 pips so calculation is 950/20 = £47.50 per pip
I always round down so not to exceed 5% so in this case my stake is £47 per pip

This wins and I get £47 x 20 = Plus £940

Results after 2 trades

a loss of 100 pips and win of 20 pips and account only down £60

5 times the loss for just a 0.3% loss in account balance

Losses emotionally hurt traders more than any thing else

A classic example

You have a trade it loses you feel sick
You trade again it loses... you make an excuse about market conditions and you dont take the next trade....it wins

Your even sicker so you take the next signal and it loses

You cant take the emotional loss after all when you paper traded you made money whats changed .... you have ! your mental comfort zone has !

You sit out the rest of the day and the next trade wins
You scream a little a dare not take the next trade because last time you had a loser after a winner ..guess what it wins

Last trade of the day you take because you need a winner..guess what it losses

When a 100 pips loss = a 10 pips loss and your 5% or 3% rule has not been broken you can learn to relax

Cheers

Paulus
  • #566
  • Dec 28, 2010 7:11am Dec 28, 2010 7:11am
Quoting pres78
Looking to trade the second breakout as shown... Sort of a Ross Hook (maybe not fully clear on these yet...) with a break out, retrace and a new point 2 and 3 in place. See what PA brings... for this one I will use point 1 for SL and -100 for TP for 1:1. Thin markets and crazy PA so I will keep a close eye on it if I get into profit.
Let this old set up ride with a pending sell order and once it hit I felt good about it since price never made it over the 50% fib. Target hit at -100.
Attached Image (click to enlarge)
Click to Enlarge Name: eurchf.gif Size: 38 KB
Today's zone = Tomorrow's opportunity!
  • #567
  • Dec 28, 2010 7:50am Dec 28, 2010 7:50am
Quoting Paulus
With a fixed TP and SL you have to be careful when working out your stake or contracts traded per trade

here is an example

you get 3 trades on EU for +10 which win = 30 pips
1 Trade on GU which loses 40 = minus 40 pips

Strike rate 75%
But lost 10 pips

Using the MM i use using the above each win or loss would result in the same financial loss.

So running the example again

you get 3 trades on EU for +10 which win = 30 pips
I get 3 x wins at 5% of account balance = 15%


1 Trade on GU which loses 40 = minus 40 pips
I get 1 x loser at...
Traders take note.....what is written here will keep you in this business over the long term. A year from now, a large percentage of traders will have given up......if you want to be one of the small percentage that are still in this business with profits.....read this
  • #568
  • Dec 28, 2010 8:10am Dec 28, 2010 8:10am
Quoting Paulus
With a fixed TP and SL you have to be careful when working out your stake or contracts traded per trade

Using the MM i use using the above each win or loss would result in the same financial loss.

So running the example again

you get 3 trades on EU for +10 which win = 30 pips
I get 3 x wins at 5% of account balance = 15%


1 Trade on GU which loses 40 = minus 40 pips
I get 1 x loser at 5% of account balance = 5%

Over all on the day a 10 % gain

When trading across several pairs with different $ values you have to be careful


I can trade £10...

if you haven't seen this spreadsheet, it is handy for working out the number of lots you need, micro, mini or standard. you can use it as just one position, or divided up into 1/3'rds and you need to be aware of the base currency (so if your trading eurgbp then just divide the suggested lot size by gbpusd to get trading lot size). You can adjust your account risk % per trade as your risk profile desires.
Attached File(s)
File Type: xls Position Risk Calc #2.xls   10 KB | 409 downloads
Catching a falling knife, no, I'm just trading the Gartley!
  • #569
  • Dec 28, 2010 8:19am Dec 28, 2010 8:19am
15 minute chart trade underway...
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd.gif Size: 37 KB
Today's zone = Tomorrow's opportunity!
  • #570
  • Dec 28, 2010 8:32am Dec 28, 2010 8:32am
Quoting pres78
15 minute chart trade underway...
TP hit.
Today's zone = Tomorrow's opportunity!
  • #571
  • Dec 28, 2010 8:57am Dec 28, 2010 8:57am
1/ pres78.....are you using MT4 charts? Are you using the standard fib tool that comes with MT4? I can not get my fibs to look like yours

2/ Paulus.....what spread betting firm are you using.....I am trading live off the MT4 charts and I am thinking of moving to a spead betting firm.

thanks!

PGPB

PS.
  • #572
  • Dec 28, 2010 9:06am Dec 28, 2010 9:06am
Quoting pgpb
1/ pres78.....are you using MT4 charts? Are you using the standard fib tool that comes with MT4? I can not get my fibs to look like yours

2/ Paulus.....what spread betting firm are you using.....I am trading live off the MT4 charts and I am thinking of moving to a spead betting firm.

thanks!

PGPB

PS.
Yes I trade using MT4 with standard Fib Tool. I just add and delete levels as I need them. I use the fib you see for my 123 trades and another fib setting for my other two trading systems.

Just go into the Fib propeties (highlight the fib on the chart and right click) and add / delete levels to suit.
Today's zone = Tomorrow's opportunity!
  • #573
  • Dec 28, 2010 9:07am Dec 28, 2010 9:07am
Nice quick one to the 38.2 fib.
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Today's zone = Tomorrow's opportunity!
  • #574
  • Dec 28, 2010 9:08am Dec 28, 2010 9:08am
Quoting pgpb
1/ pres78.....are you using MT4 charts? Are you using the standard fib tool that comes with MT4? I can not get my fibs to look like yours

2/ Paulus.....what spread betting firm are you using.....I am trading live off the MT4 charts and I am thinking of moving to a spead betting firm.

thanks!

PGPB

PS.
1) you can adjust the fbs yourself manually, just go to 'fibo properties'and add/delete to your needs

2) no offense to paulus but the spread shops will be quoting wider than MT4 unless your with a bucketshop broker, the spreads will be narrower with broker as the spread shop will be covering through them anyway

http://www.fxintel.com/ can help find some better spread providers
Catching a falling knife, no, I'm just trading the Gartley!
  • #575
  • Dec 28, 2010 9:19am Dec 28, 2010 9:19am
Watching this pair to form a point 3.
Attached Image (click to enlarge)
Click to Enlarge Name: usdchf.gif Size: 32 KB
Today's zone = Tomorrow's opportunity!
  • #576
  • Dec 28, 2010 9:20am Dec 28, 2010 9:20am
Quoting ChinaWombat
1) you can adjust the fbs yourself manually, just go to 'fibo properties'and add/delete to your needs

2) no offense to paulus but the spread shops will be quoting wider than MT4 unless your with a bucketshop broker, the spreads will be narrower with broker as the spread shop will be covering through them anyway

http://www.fxintel.com/ can help find some better spread providers

thanks Chinawombat......I am currently trading with AlpariUK...there spread is 1.6 on the EURUSD....I thought that was pretty good....but looking at that spread sheet....perhaps not so much

There was another benefit Paulus mentioned about trading with a spreadbetting company...but perhaps that is a bit off topic for this thread.

anyways...thx also for the spread sheet you posted...good stuff

Chinawombat...I looked at some of your other posts with that bizarre Garley stuff......that looks very complex....LOL

PGPB
  • #577
  • Dec 28, 2010 9:50am Dec 28, 2010 9:50am
Watching this pair to see if point 3 forms and PA heads back towards point 2...
Attached Image (click to enlarge)
Click to Enlarge Name: audusd.gif Size: 32 KB
Today's zone = Tomorrow's opportunity!
  • #578
  • Dec 28, 2010 9:56am Dec 28, 2010 9:56am
Quoting Paulus
With a fixed TP and SL you have to be careful when working out your stake or contracts traded per trade

here is an example

you get 3 trades on EU for +10 which win = 30 pips
1 Trade on GU which loses 40 = minus 40 pips

Strike rate 75%
But lost 10 pips

Using the MM i use using the above each win or loss would result in the same financial loss.

So running the example again

you get 3 trades on EU for +10 which win = 30 pips
I get 3 x wins at 5% of account balance = 15%


1 Trade on GU which loses 40 = minus 40 pips
I get 1...
Thank you Paulus.
  • #579
  • Dec 28, 2010 9:58am Dec 28, 2010 9:58am
Quoting pgpb

anyways...thx also for the spread sheet you posted...good stuff

Chinawombat...I looked at some of your other posts with that bizarre Garley stuff......that looks very complex....LOL

PGPB
yeah, the gartley stuff looks a bit spacey when you first dig into it with all the fibs, but actually is quite basic, and allows you to plan trades and levels, and the 1-2-3 helps on some entries.

Gartley actually was one of the original guys to highlight the 1-2-3 in 1935 in his book (but i'm sure others were trading it before he wrote about it ) on stocks and it's just become more refined since then.

The 1-2-3 trades work a treat on smaller time frames for entries when using larger times frames ABCD's and other harmonic patterns and helps working out when you should have a 1:1 RR or the probabilities can be played and you have a good shot at 2,3 or 4 RR

The modern Gartely is basically a refined fib form of the 1-2-3

I wont go off-topic with harmonic discussions on this thread but thanks for your interest
Catching a falling knife, no, I'm just trading the Gartley!
  • #580
  • Dec 28, 2010 10:02am Dec 28, 2010 10:02am
Quoting ChinaWombat
yeah, the gartley stuff looks a bit spacey when you first dig into it with all the fibs, but actually is quite basic, and allows you to plan trades and levels, and the 1-2-3 helps on some entries.

Gartley actually was one of the original guys to highlight the 1-2-3 in 1935 in his book (but i'm sure others were trading it before he wrote about it ) on stocks and it's just become more refined since then.

The 1-2-3 trades work a treat on smaller time frames for entries when using larger times frames ABCD's and other harmonic patterns and helps...
Hi ChinaW

I thought of PMing you....but I know that others may be interested as well.
Where can I learn the basics of this Gartely stuff

PGPB
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