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How to use the 123 strategy effectively

  • #1,121
  • Jan 27, 2011 2:34am Jan 27, 2011 2:34am
experimenting with the classic 123 setup: this is a 123 long trade on eur/jpy set at constant range bars 7, with Heiken Ashy. it's an aggressive entry before the break of point 2, based on the long and flat-bottomed HA body, which signals buying strenght. my sl was at point 3.

this time i went for a mere 1:1 r/r, as i hardly know this pair. obviously, as confidence grows, i'm planning to improve on this.
Attached Image (click to enlarge)
Click to Enlarge Name: eur-jpy_range_bars.png Size: 19 KB
  • #1,122
  • Jan 27, 2011 3:38am Jan 27, 2011 3:38am
Target 1.37070
Attached Image (click to enlarge)
Click to Enlarge Name: eu27_01_2011.gif Size: 28 KB
  • #1,123
  • Jan 27, 2011 6:12am Jan 27, 2011 6:12am
Hello everyone.

I have just finished reading this threat and stared trading on demo today. Had some nice trades + 108 pips.

I have one question what does Paulus mean with this rule: If I take a short 1st thing then the rest of my trades go long short long short etc?
Does he mean by pair or all trades by this rule? ( like if EU on short then GU long or I can go short on GU to?)


 Best wishes,


 D.
  • #1,124
  • Jan 27, 2011 6:28am Jan 27, 2011 6:28am
Quoting danel
Hello everyone.

I have just finished reading this threat and stared trading on demo today. Had some nice trades + 108 pips.

I have one question what does Paulus mean with this rule: If I take a short 1st thing then the rest of my trades go long short long short etc?
Does he mean by pair or all trades by this rule? ( like if EU on short then GU long or I can go short on GU to?)


 Best wishes,


 D.

Hello Danel

He means by pair. So, if his first trade on EU is a short then his next on EU will be a long. The reason is this is a reversal strategy so if you had two shorts in a row then the second trade would be a continuation.

The only caveat is in the case of a failed trade - so if you placed a short and your s/l was hit that means the trend is still long, so you would still be looking for a new short.

Hope that makes sense!
  • #1,125
  • Jan 27, 2011 6:30am Jan 27, 2011 6:30am
Quoting danel
Hello everyone.

I have just finished reading this threat and stared trading on demo today. Had some nice trades + 108 pips.

I have one question what does Paulus mean with this rule: If I take a short 1st thing then the rest of my trades go long short long short etc?
Does he mean by pair or all trades by this rule? ( like if EU on short then GU long or I can go short on GU to?)


 Best wishes,


 D.
congratulations on your green pips, danel. paulus alternates trades on same pair: for instance, e/u: if 1st trade is long, then 2nd is short, 3rd is long and so on... usually, but not always, correlated pairs will have same structure, but it could happen that while e/u 1st trade is a long, g/u 1st trade is a short. in this case you would alternate according to the pair, and the 2nd trade on e/u would be a short, while 2nd trade on g/u would be a long.

if sl is hit, you look for trades in the same direction of the failed trade.

also, he keeps each time frame independent on the count.

hope all is clear.
  • #1,126
  • Jan 27, 2011 6:53am Jan 27, 2011 6:53am
Hello.

Yes it's clear now thank you bubola and Delite
I'm on demo for some time and if this system is clear for me then I'l try live.
Hope you had a nice day.

Best wishes,

D.
  • #1,127
  • Jan 27, 2011 7:10am Jan 27, 2011 7:10am
Quoting bubola
experimenting with the classic 123 setup: this is a 123 long trade on eur/jpy set at constant range bars 7, with Heiken Ashy. it's an aggressive entry before the break of point 2, based on the long and flat-bottomed HA body, which signals buying strenght. my sl was at point 3.

this time i went for a mere 1:1 r/r, as i hardly know this pair. obviously, as confidence grows, i'm planning to improve on this.
I have seen other trader enter just below point 2 (in case of long) and above (in case of short) too.

Why is that? Isn't the traditional way to enter is above point 2 (for long entries). I mean the whole point is to enter when price brakes the nearest resistance point which is point 2. Or am I missing something?
  • #1,128
  • Jan 27, 2011 7:19am Jan 27, 2011 7:19am
Quoting vicious
I have seen other trader enter just below point 2 (in case of long) and above (in case of short) too.

Why is that? Isn't the traditional way to enter is above point 2 (for long entries). I mean the whole point is to enter when price brakes the nearest resistance point which is point 2. Or am I missing something?
no, you're right. entry at break of point 2 is certainly safer. but there are some traders who will anticipate the entry when there's a strong candle confirming a HL for long or LH for shorts - look for vantage's thread here in FF.

also, although riskier, r:r is better. for my personality, i prefer to enter earlier on a strong candle, since TP is closer. again, that's just me.
  • #1,129
  • Jan 27, 2011 10:59am Jan 27, 2011 10:59am
Quoting bubola
no, you're right. entry at break of point 2 is certainly safer. but there are some traders who will anticipate the entry when there's a strong candle confirming a HL for long or LH for shorts - look for vantage's thread here in FF.

also, although riskier, r:r is better. for my personality, i prefer to enter earlier on a strong candle, since TP is closer. again, that's just me.
I agree. Closer TP with aggressive trading is my style as well. If a 123 is big one, I like to enter early.
A successful trading depends on knowing what to analyze.
  • #1,130
  • Jan 28, 2011 6:43am Jan 28, 2011 6:43am
Here are my trades for the day...

So far I have taken and won a 123 and a 2B set-up... I am currently in another 2B set-up on the EURGBP after the successful 123.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: usdchf 2b.gif Size: 19 KB
Click to Enlarge Name: eurgbp 123.gif Size: 20 KB
Click to Enlarge Name: eurgbp 2b.gif Size: 19 KB
Today's zone = Tomorrow's opportunity!
  • #1,131
  • Jan 28, 2011 7:01am Jan 28, 2011 7:01am
On you're CHF trade it looks like a valid 123 long setup yet you took a 2B short. Can you explain the difference please

Many thanks
  • #1,132
  • Jan 28, 2011 7:51am Jan 28, 2011 7:51am
Nice trades Pres, I just manged this 2B setup today and achieved 1:1. Of course I could have got more but sticking with 1:1 for the moment. As well as the 2B setup we were also at resistance on higher timeframes from the high of the Asian session.
Attached Image (click to enlarge)
Click to Enlarge Name: 2b eur 28 jan.gif Size: 33 KB
Dream big, start small. Have it all
  • #1,133
  • Jan 28, 2011 8:20am Jan 28, 2011 8:20am
Quoting pres78
Here are my trades for the day...

So far I have taken and won a 123 and a 2B set-up... I am currently in another 2B set-up on the EURGBP after the successful 123.
TP hit finally... didn't look good since price retraced all the way back to entry after coming to within 1 pip of my TP... it hit on the second go up.
Today's zone = Tomorrow's opportunity!
  • #1,134
  • Jan 28, 2011 12:46pm Jan 28, 2011 12:46pm
1 win on EU for me 5% gain
and 2 wins on GU 10% gain so a nice day

P
Attached Image (click to enlarge)
Click to Enlarge Name: 123 fri.jpg Size: 99 KB
  • #1,135
  • Jan 28, 2011 3:17pm Jan 28, 2011 3:17pm
another 5% win

P
Attached Image (click to enlarge)
Click to Enlarge Name: 5%.gif Size: 21 KB
  • #1,136
  • Jan 29, 2011 12:01pm Jan 29, 2011 12:01pm
Hello.
Paulus I have a question what fibo do you use that shows the prices where the fibo levels are, I use MT4 standard fibo?

Best wishes,

D.
  • #1,137
  • Jan 29, 2011 12:35pm Jan 29, 2011 12:35pm
Hi

I use the mt4 one also

If you double click and go to fibo properties if you want to display the price on for example the 100% line just make sure it reads in description column

100 %$

cheers

P
  • #1,138
  • Jan 29, 2011 2:00pm Jan 29, 2011 2:00pm
Hey.

Thanks Paulus.
I have a question about your MM how do you calculate your 5% from your account, do you calculate it before every trade or do you calculate it once a day, week?

Best wishes,

D.
  • #1,139
  • Jan 30, 2011 6:11am Jan 30, 2011 6:11am
Quoting danel
Hey.

Thanks Paulus.
I have a question about your MM how do you calculate your 5% from your account, do you calculate it before every trade or do you calculate it once a day, week?

Best wishes,

D.
You have to calculate before each trade..you can use a simple spread sheet or just pencil and paper ..its not exact as your fill may be a few pips out but its 99% correct

cheers

P
  • #1,140
  • Jan 30, 2011 7:39am Jan 30, 2011 7:39am
here are 2 very good calculators for working out your trade size

P
Attached File(s)
File Type: xls position size calculator.xls   8 KB | 444 downloads
File Type: xls Risk Calculation.xls   27 KB | 444 downloads
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