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Attachments: How to use the 123 strategy effectively
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How to use the 123 strategy effectively

My 2nd 123 goes for a 30 pip winner on a 1/1RR

So one BE and one winner so far.

Better start looking for the next trade now
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Quoting ChinaWombat
longer time frame and double top confirmation
nice trade but it wasnt a 123 because 3 wasnt lower than 1, and your entry hit only because of the 530 am EST british high priority economic release which easily could have been just the opposite spike.
Quoting Paulus
...
Hey Paulus. I have a few questions regarding your trading style. Would you be so kind to allow me sending you private massages, hence I don't want to mess around in this thread. There is also the possibility to write me an email.
Many regards and thanks.
Quoting simpletrades
nice trade but it wasnt a 123 because 3 wasnt lower than 1, and your entry hit only because of the 530 am EST british high priority economic release which easily could have been just the opposite spike.

it was a double top.... valid set-up, doesn't matter what triggers it....
Catching a falling knife, no, I'm just trading the Gartley!
Quoting ChinaWombat
it was a double top.... valid set-up, doesn't matter what triggers it....
except the thread is about trading 1-2-3 setups.
Quoting simpletrades
except the thread is about trading 1-2-3 setups.

and once you have done a few thousand then you'll be able to find what does and doesn't work for you....and make your it your own version...

until then , good luck in your appreciation of the various methods, and your understanding of what makes the '2' point
Catching a falling knife, no, I'm just trading the Gartley!
Anybody had any luck this week, i'm taking a few hits. Anyone have charts to post of their trades to compare?
I think this is a great system, but I'm having real problems identyfying where the reversals start and when to enter, any tips appreciated.
Quoting forex1962
I think this is a great system, but I'm having real problems identyfying where the reversals start and when to enter, any tips appreciated.
It's very simple. For short trades the market must be currently going up. As it makes a high mark that as point 1. If the market keeps pushing up move your point 1 up with it. Once price starts going down a few candles you have now established a point 1 so you're looking for point 2 which is a low. Same proceedure as above in that as each candle closes, move your point 2 down until you have a candle that doesn't make a lower low. Now you're looking for a point 3 which must be below point one. Each time you get a candle close check if it's makes a higher high than the previous. If it does, move your point 3 until it doesn't. Once your point 3 is in place you then place an sell stop order 1 pip below point 2 with your stop either just above point 1 or point 3 (depending on what works best for you) and a TP at whatever level you are working to. Some use clear support levels, other a fixed risk reward. Of course just reverse the above sequence for a long trade. I hope this answers your question. You never know whether the 123 pattern you pick is at the top of a move or not
Dream big, start small. Have it all
Quoting sean007
It's very simple. For short trades the market must be currently going up. As it makes a high mark that as point 1. If the market keeps pushing up move your point 1 up with it. Once price starts going down a few candles you have now established a point 1 so you're looking for point 2 which is a low. Same proceedure as above in that as each candle closes, move your point 2 down until you have a candle that doesn't make a lower low. Now you're looking for a point 3 which must be below point one. Each time you get a candle close check if it's makes...
Thank you for the detailed answer, I don't have any problems actually finding a 123 set up, but the problem I have is finding the right one. I seem to enter a position at the wrong time and it turns against me.
It's as if I see the trend rising think it looks like a valid 123 set up for a reversal, get in then it turns back and carries on rising!
I thoght this looked like a trend reversal enetered at 2 then stopped out a few candles later.
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Quoting forex1962
Thank you for the detailed answer, I don't have any problems actually finding a 123 set up, but the problem I have is finding the right one. I seem to enter a position at the wrong time and it turns against me.
It's as if I see the trend rising think it looks like a valid 123 set up for a reversal, get in then it turns back and carries on rising!
I thoght this looked like a trend reversal enetered at 2 then stopped out a few candles later.
That of course is the million dollar question. There are 123 setups forming all the time especially on lower timeframes. I guess this is where your skills reading the market come in. I know Paulus has a fixed way of doing these trades but personally I look at support and resistance levels. My ideal long setup is one that forms around support, there's no restistance on the way to your profit target and the size in pips of the 123 is less than 25 pips . Very useful levels of support and resistance are the previous 4 days highs and lows. On this particular setup, yesterdays high was at 1.3588. Price came up to it, formed a 123 short setup on the 1 minute and dropped down to stop you out. The other thing to take into acount is the time. You took this setup just before the London open which generally gives extra volatilty. Because of the factors above I actullly took the 1 minute short setup and got doubled the points I risked. I will post charts and give details of the method tomorrow.
Dream big, start small. Have it all
Quoting ChinaWombat
and once you have done a few thousand then you'll be able to find what does and doesn't work for you....and make your it your own version...

until then , good luck in your appreciation of the various methods, and your understanding of what makes the '2' point
except your double top in post #1260 finished confirming with the first long red bar over an hour and a half before you jumped in on the british economic release hoping to catch the ride. If you were really trading because of the double top, you'd have entered when the first red bar closed at 4am EST not the momentum after 530 am EST. Dont pat yourself on the back for a trade that got lucky 90 minutes after the smart entry should have occurred but didnt.http://www.forexfactory.com/images/icons/icon13.gif
And dont post charts that dont relate to 1-2-3 which is what this thread is. Paulus had other threads ruined because people just wanted to post whatever they wanted as to indicators and trades that were unrelated to his thread. He ended the TM thread, started a new one and people still posted unrelated garbage. Lets at least respect him on this one--the rest of us, anyhow.
Quoting simpletrades
except your double top in post #1260 finished confirming with the first long red bar over an hour and a half before you jumped in on the british economic release hoping to catch the ride. If you were really trading because of the double top, you'd have entered when the first red bar closed at 4am EST not the momentum after 530 am EST. Dont pat yourself on the back for a trade that got lucky 90 minutes after the smart entry should have occurred but didnt.http://www.forexfactory.com/images/icons/icon13.gif
And dont post charts that dont...
simple,

a) its not Paulus's thread, it was set-up by someone else (who has subsequently vanished) there are a number on contributers with different methods that have been shown on how to trade this simple set-up. Paulus has been kind enough to show with great patience and detail how he trades his style of 1-2-3
b) why should i have have entered at 4pm? where is the break of 2? i know you seem to have trouble working it out where the 2 point is but there wasn't any break
c) I've shown alternative 1-2-3 's entries and Vic's 2B, Pres78 showed how he does it, so there a a number of ways to trade this, and others have shown Joe Ross as well
d) if you don't like my trading method no one is forcing you to follow it...
e) the more & more i practice & study the luckier i get i guess!

this is a forum to exchange what works and doesn't work in this method
what have you contributed so far? oh yes, "where is the 2 point?" so now you're the moderator of this thread when you can't even spot the basic set-up... well good luck
Catching a falling knife, no, I'm just trading the Gartley!
Good morning, China Wombat! Thanks for your posts - they are very informative. Have you had a good week? Yesterday was challenging for me. Will post some charts later.
Just wanted to add another little rule that I try to adhere to. While I will start my count at 7am, I want to see the point 3 being formed after 8am. I think that eliminates some of the fake moves we see at that time.
Clear one on EURJPY
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Quoting Delite
Just wanted to add another little rule that I try to adhere to. While I will start my count at 7am, I want to see the point 3 being formed after 8am. I think that eliminates some of the fake moves we see at that time.

the week has been ok....will be better if audusd can get to 1.0080 before the day finishes (15M) set up

potential set-ups on gbpusd and nzdusd (both 15M)


if you're trading 5M charts then thats sensible...you will probably get better quality set ups that way

enjoy your trades...
Catching a falling knife, no, I'm just trading the Gartley!
Quoting simpletrades
except your double top in post #1260 finished confirming with the first long red bar over an hour and a half before you jumped in on the british economic release hoping to catch the ride. If you were really trading because of the double top, you'd have entered when the first red bar closed at 4am EST not the momentum after 530 am EST. Dont pat yourself on the back for a trade that got lucky 90 minutes after the smart entry should have occurred but didnt.http://www.forexfactory.com/images/icons/icon13.gif
And dont post charts that dont...
I have been away from trading the last week and a half with the birth of my newest daughter but have been following along with my subscribed threads... I see that CW has already replied but I also wanted to point out that Paulus himself (who did NOT start this thread) has posted 2B set-ups as well. There are many, many ways to trade 123 set-ups as seen here over the last several weeks with the assortment of posts from traders all trading 123's but with slightly different methods all of which work for them.

2B set-ups are just an extention of the 123 set-ups and allow you the flexibility to get into a trade even when the original 123 set-up either failed or you were stop out. Yes this tread is about 123's (well actually the thread starter was simply asking how people trade 123's, which is what we have been all trying to share) but in order to be successful one needs to be able to adjust with the market and see opportunities to get in or get back in even after it appears the original trade has failed.

This is also the reason why I trade both trend continuation 123's not just trend reversals. If the market wants to keep going up after I have taken a long trade why would I want to fight it and only look for shorts... this is what works for me and how I am successful. Everyone needs to trade what works for them and FF is supposed to be a place for us to share our thoughts and ideas. Now I completely agree that we want to stay on topic and if someone showed up posting charts that have nothing to do with pattern trading then I say go find another thread... but as of yet that has not happened.

Best of luck to all...
Today's zone = Tomorrow's opportunity!
to tag onto pres78, here is another thread that is a nice compliment to this one. If I was able to read these 2 threads when I first started in June of last year, I would have saved a lot of stupid trades! The thread is Niceguy Ridiculous 7 Pips Trading System under the Trading Systems forums.
Lord, Liar, Lunatic. Those are only 3 options to Christ's diety claim.
first trade entry marked off... prior support in background

second potential trade however it's friday so will cxl it if not triggered in next few hours...and start again at FFO...

positives for the trade (if it wasn't friday night) is the break under the previous rising support line with the failure to hold above it

negatives for the trade is the descending (resistance but now support) of the daily down trend line

.618% fib at 1.3623 so that also need to close (not just trade) under that to help support bear case

this is a little more complicated than Paulus trades initially but becomes a natural flow after a couple of hundred of set-ups, and just shows a different method of 123's that works for me...

you can find your own harmony with the set-up but more crticially the exit points!
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Catching a falling knife, no, I'm just trading the Gartley!
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