How to use the 123 strategy effectively | Page 43 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

How to use the 9/20 EMA setup effectively 162 replies

Why not 123 strategy? What are Advantages and Disadvantages! 5 replies

How To Effectively Trade In Both Range And Trending Market By A Single Method 39 replies

Scalping the EUR/GBP effectively - Forturama 158 replies

Attachments: How to use the 123 strategy effectively
Exit Attachments

How to use the 123 strategy effectively

  • #841
  • Jan 6, 2011 5:04pm Jan 6, 2011 5:04pm
Hi ChinaWombat,

Does it make sende if we're ranging pre LO to have two counts in place - like on GU yesterday morning?

And then take the first trade?
Thanks

Thomas

Quote:
Originally Posted by ChinaWombat http://cdn.forexfactory.com/images/buttons/viewpost.gif
then they become 1
Attached Image (click to enlarge)
Click to Enlarge Name: gu counting.jpg Size: 86 KB
  • #842
  • Jan 6, 2011 5:42pm Jan 6, 2011 5:42pm
Hi,

After the long GU winner from this morning (first black count) we are looking for shorts - right? Like the second black count.

But the LH in the blue circle was already a successful reversal, but not fitting in our setup criteria. The PA was range bound so reversals would be expected to be at the top and bottom.

So could one starting to look for longs like the red count?

Cheers

Thomas
Attached Image (click to enlarge)
Click to Enlarge Name: gu today.gif Size: 29 KB
  • #843
  • Jan 6, 2011 5:48pm Jan 6, 2011 5:48pm
Quoting tdeu
Hi,

After the long GU winner from this morning (first black count) we are looking for shorts - right? Like the second black count.

But the LH in the blue circle was already a successful reversal, but not fitting in our setup criteria. The PA was range bound so reversals would be expected to be at the top and bottom.

So could one starting to look for longs like the red count?

Cheers

Thomas
What in the blue circle set-up did not meet the criteria? Several traders took the blue circle set-up. The short count you show has point 2 way down almost to where the long trade started so taking a short right at that point would be somewhat risky IMHO.

If you trade the Paulus method then yes after a long you would look short and then long etc... What I don't know and Paulus will have to clarify is if the short set-up is missed and not taken by the trader but is a successful trade does he skip short and go back to long.
Today's zone = Tomorrow's opportunity!
  • #844
  • Jan 6, 2011 8:55pm Jan 6, 2011 8:55pm
Thomas,

If there is no count from the NY close in play on a bigger time frame then I would look for the first extreme from the Asian session to begin the count, and yes, you can have 2 counts setting-up. It might be handier to also just drop back a few time frames to see how the bigger picture looks, S/R points and then drill back in.

On the chart I've shown how I count it. I'm rather fond of the 2B trade (some people call it the 'oops'!) which is just false break of the 1 point, with qualifications, but it need to be adapted for this short term pricing action. (Especially on the bid side where a new lower low doesn't really mean it occured, could just be the wider spread of the broker.)

The 2B also allows for better R:R which of course is counter-balanced by having more failures.

First entry (short) is on the back of a 2B set-up, and a break of the low's of the red candles. The 2B target is usually a prior pivot point (which will also be support).

2nd Entry (long) You have two 1-2's here but I really wouldn't class the second 1 point as it's low is only marginally lower. You then have 3 tops before the conventional buy is triggered and 1R:R ( my R:R is exactly 1 by which I mean it includes the total risk plus spread). You then have some 1-2 sell set-ups.

The 1-2 which you have in blue on your chart I'm not sure why you didn't think that was tradeable. It comes in at some fib resistance, .886 which provides some confluence to support the trade. As there were very long bars in the intial decline, and lots of short bars in the subsequent rally, it's worth a calculated risk that the next move down will also have long bars in it. So an extension of 1.618, or even 2R:R was justified. I got very lucky as the trade moved about 5 seconds after I entered my stopentry.It was literally @ 44 when I placed the order @ 34 and then triggered. I barely was able to print the chart out in time.

Some 1-2's buys start to form at the prior support area, and a conventional 1-2-3 buy set-up gets triggered and tp done.

You're now looking for sells for 2 reasons, firstly, you've had a successful buy, secondly, price action on the day has had two significant (on a 5 minute relative basis) down moves with a small number of long bars. A 2B shows up and entered at the low of the second red bar (which is just a price filter against a false pin-bar). TP at previous pivot low.

It's now NY lunch time and you now start counting for a buy-set up and the first count fails. There was another small sell set-up which you could have taken profit on where the 2 is. There is a 1/2B Buy set-up around 5pm NY time but as the more experienced guys will tell you, why bother with Asian time.

Good luck...
Attached Image (click to enlarge)
Click to Enlarge Name: jan0711 1-2-3 review.gif Size: 29 KB
Catching a falling knife, no, I'm just trading the Gartley!
  • #845
  • Jan 7, 2011 12:33am Jan 7, 2011 12:33am
Quoting ChinaWombat
Thomas,

If there is no count from the NY close in play on a bigger time frame then I would look for the first extreme from the Asian session to begin the count, and yes, you can have 2 counts setting-up. It might be handier to also just drop back a few time frames to see how the bigger picture looks, S/R points and then drill back in.

On the chart I've shown how I count it.
beautiful and clear analysis. thanks, CW, very informative. i've added a .886 level to my fib tool, i'm curious to see what it does.
  • #846
  • Jan 7, 2011 1:27am Jan 7, 2011 1:27am
lost 10% yest gave a small part back of good gains over last couple months

yest saw my daily trade swing south again

now up 470 pips nice + 150 pip move yest
if we break last major swing low this will go on to smash its TP.......I hope !

cheers

P
Attached Image (click to enlarge)
Click to Enlarge Name: daily 150.gif Size: 25 KB
  • #847
  • Jan 7, 2011 2:41am Jan 7, 2011 2:41am
eurusd key levels @ 1.2965 and 1.3055....can europe punch it lower or do they need the US eco data to push it through, or does it get through?

gbpusd is how i see the count for the start of the day.... the sell pt 1 has already had 50% retrace

let's see
Attached Image(s) (click to enlarge)
Click to Enlarge Name: jan0711 1-2-3 lon open.gif Size: 26 KB
Click to Enlarge Name: jan0711 lon open.gif Size: 23 KB
Catching a falling knife, no, I'm just trading the Gartley!
  • #848
  • Edited 3:31am Jan 7, 2011 2:45am | Edited 3:31am
Quoting ChinaWombat
gbpusd is how i see the count for the start of the day.... the sell pt 1 has already had 50% retrace

let's see
short cable

stopped out
Catching a falling knife, no, I'm just trading the Gartley!
  • #849
  • Jan 7, 2011 3:30am Jan 7, 2011 3:30am
EU long. Currently in drawdown.
Attached Image (click to enlarge)
Click to Enlarge Name: 123.gif Size: 24 KB
  • #850
  • Jan 7, 2011 3:48am Jan 7, 2011 3:48am
Quoting ChinaWombat
gbpusd is how i see the count for the start of the day.... the sell pt 1 has already had 50% retrace
...i had the opposite initial direction to you on GU this morning...what's the consensus rule(s) on establishing this at the moment?...i'd like to get this fuzziness nailed down this year
Attached Image (click to enlarge)
Click to Enlarge Name: 7th Jan GU 123 initial direction.PNG Size: 37 KB
  • #851
  • Jan 7, 2011 3:59am Jan 7, 2011 3:59am
stopped out on the initial 1-2-3 trade, but failed to hold above 60 and 2B set-up in place... if this fails then will let market run it's course until clearer PA
Attached Image (click to enlarge)
Click to Enlarge Name: jan0711 lon open 2b trade.gif Size: 24 KB
Catching a falling knife, no, I'm just trading the Gartley!
  • #852
  • Jan 7, 2011 4:01am Jan 7, 2011 4:01am
long 123 triggered.
i also took short 2B shooting star entry +5% profit
Attached Image (click to enlarge)
Click to Enlarge Name: g-u_5mn_long.png Size: 36 KB
  • #853
  • Jan 7, 2011 4:06am Jan 7, 2011 4:06am
Trying a long on GU
filled 5463
SL 5429
TP 5497

Open for comments

Attached Image (click to enlarge)
Click to Enlarge Name: gu 15min 7 jan 10.gif Size: 13 KB
http://www.forexfactory.com/%3Ca%20h...0.jpg]%3C/a%3Ehttp://www.forexfactory.com/%3Ca%20h...n_7_jan_10.jpghttp://www.forexfactory.com/%3Ca%20h...n_7_jan_10.gifhttp://www.forexfactory.com/%3Ca%20h...n_7_jan_10.gifhttp://www.forexfactory.com/[url...20host%3C/a%3E
  • #854
  • Jan 7, 2011 4:10am Jan 7, 2011 4:10am
Quoting sidefx
...i had the opposite initial direction to you on GU this morning...what's the consensus rule(s) on establishing this at the moment?...i'd like to get this fuzziness nailed down this year

your count is fine... i just don't like that prior resistance up here at the 60-70 level... i expect my s/l to be done shortly
Catching a falling knife, no, I'm just trading the Gartley!
  • #855
  • Jan 7, 2011 4:17am Jan 7, 2011 4:17am
Quoting sidefx
...i had the opposite initial direction to you on GU this morning...what's the consensus rule(s) on establishing this at the moment?...i'd like to get this fuzziness nailed down this year
With you on the count. This is how I see it.
Attached Image (click to enlarge)
Click to Enlarge Name: 123.gif Size: 27 KB
  • #856
  • Jan 7, 2011 4:20am Jan 7, 2011 4:20am
Quoting Bakuli
With you on the count. This is how I see it.
me too.
...eur/usd also gave us another 2B, which i missed as i was posting. on a range day this seems to be the correct way to trade
  • #857
  • Jan 7, 2011 4:28am Jan 7, 2011 4:28am
NFP day guys trade careful... makets tend to range leading into this major new event and then it will be very volotile. All counts will usually go out the window so be careful.
Today's zone = Tomorrow's opportunity!
  • #858
  • Jan 7, 2011 4:28am Jan 7, 2011 4:28am
Quoting ChinaWombat
your count is fine... i just don't like that prior resistance up here at the 60-70 level... i expect my s/l to be done shortly
I like Paulus' black & white approach but i find myself drawn to factoring in key supply and demand levels....GU is working it's way through demand orders at the moment, but price has been at these levels a number of times in the last few sessions, so demand is probably weakening now...like you say, it might be a better plan to wait for more of a directional move before taking the next setup.

.....the black and white approach simply says, just trade (like a robot) and sod the analysis
  • #859
  • Jan 7, 2011 5:13am Jan 7, 2011 5:13am
Quoting sidefx
I like Paulus' black & white approach but i find myself drawn to factoring in key supply and demand levels....GU is working it's way through demand orders at the moment, but price has been at these levels a number of times in the last few sessions, so demand is probably weakening now...like you say, it might be a better plan to wait for more of a directional move before taking the next setup.

.....the black and white approach simply says, just trade (like a robot) and sod the analysis
sorry if I sounded obtuse with my previous comments.... this method is can be extremely black and white.

basically we're trying to ride the market wave and enter into long and short trades at what are perceived to be high probability market tops and bottoms in the time frame we're trading in.

people get too hung up on getting the count right first thing in their trading day. it really doesn't matter with this method. if a short is the wrong way to start, you get sl'd but it will be the right position once the correct long position arrives at it's tp and vice versa.

my original short count was wrong and the possie got stopped, but then PA failed and I get a 2B signal. For me the risk reward to take this is greater than the long position under conventional 1-2-3's. I know this may sound contradictory but I have a 3:1 RR with the 2B position but if I went long on conventional method my RR is just 1:1.

If the sell 2B is wrong then all I do is wait for the conventional count to be correct and head on the way to it's profit objective. I then wait for the 123 bear setup, or another bear 2B to set-up.

if it sounds confusing, take the stress out of the decision making. First thing in your day look at the charts. If you find alternative counts then literally toss a coin. If your right then you will be in synch with the market straight away and have a fun day taking all the signals. If you get stop'd, don't sweat it, the market is telling you your wrong with the count, and then to just sit and wait until it calls you back to play and then your count will be in synch.

it is pretty robotic.... for your first trade just use 30-50% of your normal risk allocation and it will take the sting out of the s/l. Your confidence should be reinforced as the market has given you a heads-up as to where you are in synch'd into the wave...

plus this morning isn't probably the best trading conditions before major economic release...

the main thing is for you to find what works for you, and makes you feel comfortable...
Catching a falling knife, no, I'm just trading the Gartley!
  • #860
  • Jan 7, 2011 5:26am Jan 7, 2011 5:26am
Quoting ChinaWombat
sorry if I sounded obtuse with my previous comments.... this method is can be extremely black and white.

basically we're trying to ride the market wave and enter into long and short trades at what are perceived to be high probability market tops and bottoms in the time frame we're trading in.

people get too hung up on getting the count right first thing in their trading day. it really doesn't matter with this method. if a short is the wrong way to start, you get sl'd but it will be the right position once the correct long position arrives at...
Great post! Thanks.
9 traders viewing now