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How to use the 123 strategy effectively

  • #1,401
  • Mar 8, 2011 2:51am Mar 8, 2011 2:51am
Quoting diamonddbw
Took 1st profit +12, (on 3 of 4 positions) @ -61.8. This chart was not the platform I took trade on. Other chart did reach 61.8.

At this point I moved my stop to 38.2, which if hit before I exit, would be negative 10 pips.
++++++++++++++++++++++++++++++++


As price continues in the direction of my trade;
• @ -100% stop goes to BE
• From BE I trail price incrementally. So if price continues beyond -100, my stop follows pip for pip, until I either get stopped out or I observe a reversal signal, or news is imminent. In the case of news, I may choose to exit before hand, or roll the dice. As long as it's a free trade, it's worth the risk to me.

Current look at above trade:
It appears now that there's a good chance for price to continue down.
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  • #1,402
  • Mar 8, 2011 3:23am Mar 8, 2011 3:23am
Quoting diamonddbw
++++++++++++++++++++++++++++++++


As price continues in the direction of my trade;
• @ -100% stop goes to BE
• From BE I trail price incrementally. So if price continues beyond -100, my stop follows pip for pip, until I either get stopped out or I observe a reversal signal, or news is imminent. In the case of news, I may choose to exit before hand, or roll the dice. As long as it's a free trade, it's worth the risk to me.

Current look at above trade:
It appears now that there's a good chance for price to continue down.
++++++++++++++++++++++++++++++++

Concluded this trade: Final position -3.6
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  • #1,403
  • Mar 8, 2011 4:42am Mar 8, 2011 4:42am
Hi Diamond,

thanks for your posts, i had the same trade marked as you on the EU which you marked as a no trade, i cannot understand why

eu - looking for long
point 1 marked - agreed
point 2 marked - agreed
point 3 marked - agreed - as soon as point 3 is marked the rules state that you enter a stop order 1 pip above point 2, because in theory you are looking for a break of point 2

therefore i cannot understand why you marked it as a no trade?
ok, it would have hit sl, but I thought we were looking for a break of point 2 once we had a point 3, in which case you had, or did i miss somewhere a rule that there must be more than 1 candle between point 3 and the break of point 2

Regards
John
  • #1,404
  • Mar 8, 2011 6:02am Mar 8, 2011 6:02am
Quoting jmw1970
Hi Sean,

so it appears you use the 1m chart to determine the direction, ie. look at a setup on 1m chart (without trading it??) and then switch to 5m chart to look for the opposite direction as normal.

IE. in your picture there was a 1m short setup, which means that as we are alternating the next correct setup on 5m should be long?

For me, it seems the most confusing thing is starting the count correctly at the beginning of each day, once I have the count no problems.

Regards
John
Hi John
I don't use Paulus method but one I've devoloped using the 200 Tick Chart. I outlined it here http://www.forexfactory.com/showpost...postcount=1314. It involves 2 possible trade setups.
1. The Frankfurter as outlined in this post http://www.forexfactory.com/showpost...postcount=1388.
Requirements are a new high in the Asian session between Frankfurt and London Open (ideally around 7.30am GMT) and 123 short setup on the 200 tick chart or 1 minute chart. Target is around 1:2 risk:reward
2. The London Open breakout.
Chart Setup:
1. Draw the last 4 days highs and lows. These must be using the days start and end to be 10pm GMT. These are used as support and resistance.
2. Draw the low and high of the range from 8.00am to 8.15am GMT. I start these immediatley at 8.00 am and then move them as the range expands. In Metatrader I place a rectange rather than lines but either works fine.
Method:We are now looking for a 123 setup on the 1 minute or 200 tick in either direction formed within this 15 minute boundary. It will often form and trigger before the 15 minutes has completed. If we get a valid Frankfurter then I'm expecting a long but this doesn't always happen. Take note of the 4 day H/L as these form S/R levels . . . . just see how price reversed down today to the 2 day low just before the London Open and then bounced up to around the 1 day low. The 2DL has acted as support and resistance over 10 times today so far.
The method is by no means mechanical and does require quick fingers and ideally a low spread as you may be shooting for less than 10 pips. However it has a high success rate and can lead to some really big moves. I'm looking to take some profits at a suitable S/R level (today was the 2DL), move to B/E and then try and get a runner on the 2nd part
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Dream big, start small. Have it all
  • #1,405
  • Mar 8, 2011 6:44am Mar 8, 2011 6:44am
Quoting jmw1970
Hi Diamond,

thanks for your posts, i had the same trade marked as you on the EU which you marked as a no trade, i cannot understand why

eu - looking for long
point 1 marked - agreed
point 2 marked - agreed
point 3 marked - agreed - as soon as point 3 is marked the rules state that you enter a stop order 1 pip above point 2, because in theory you are looking for a break of point 2

therefore i cannot understand why you marked it as a no trade?
ok, it would have hit sl, but I thought we were looking for a break of point 2 once we had a point 3,...
++++++++++++++++++++++++++++++++


Hey John. In the second chart that I marked as "No Trade", it was due to the fact that there is only one candle separating #2 & #3. One of the rules says to not count a new point unless at least 2 candles are between it and the previous point.
  • #1,406
  • Mar 8, 2011 7:11am Mar 8, 2011 7:11am
Quoting sean007
Hi John
I don't use Paulus method but one I've devoloped using the 200 Tick Chart. I outlined it here http://www.forexfactory.com/showpost...postcount=1314. It involves 2 possible trade setups.
1. The Frankfurter as outlined in this post http://www.forexfactory.com/showpost...postcount=1388.
Requirements are a new high in the Asian session between Frankfurt and London Open (ideally around 7.30am GMT) and 123 short setup on the 200 tick chart or 1 minute chart. Target is around 1:2 risk:reward
2. The...
++++++++++++++++++++++++++++++++

Are any tick charts available without cost?
  • #1,407
  • Mar 8, 2011 7:14am Mar 8, 2011 7:14am
Quoting diamonddbw
++++++++++++++++++++++++++++++++


Hey John. In the second chart that I marked as "No Trade", it was due to the fact that there is only one candle separating #2 & #3. One of the rules says to not count a new point unless at least 2 candles are between it and the previous point.

Hi Diamond,

I understood the second chart, my question was with the 4th chart (the last chart in post 1399) that you marked as a no trade EU

Regards
John
  • #1,408
  • Mar 8, 2011 7:33am Mar 8, 2011 7:33am
Quoting jmw1970
Hi Diamond,

I understood the second chart, my question was with the 4th chart (the last chart in post 1399) that you marked as a no trade EU

Regards
John
++++++++++++++++++++++++++++++++

The 4th chart did not go one full pip above #2 point. Therefore it did not qualify for entry. At least on my charts.

Personally, I don't always get in at exactly the 1 pip mark, particularly on the E/J because it can be pretty flippant. But I do need to set up more entry orders for these so I get my precise fill. Every pip counts since many of the set ups have TP's in the low double digits.
  • #1,409
  • Mar 8, 2011 7:52am Mar 8, 2011 7:52am
Quoting diamonddbw
++++++++++++++++++++++++++++++++

Are any tick charts available without cost?
Yes there's a free beta version of Multicharts available at http://www.multicharts.com/free/

Then go to MB Trading and sign up for a forex MBT Desktop Pro demo account which gives you your datafeed. Let me know if you need help getting it set up.
Dream big, start small. Have it all
  • #1,410
  • Mar 8, 2011 8:14am Mar 8, 2011 8:14am
Quoting diamonddbw
++++++++++++++++++++++++++++++++

The 4th chart did not go one full pip above #2 point. Therefore it did not qualify for entry. At least on my charts.

Personally, I don't always get in at exactly the 1 pip mark, particularly on the E/J because it can be pretty flippant. But I do need to set up more entry orders for these so I get my precise fill. Every pip counts since many of the set ups have TP's in the low double digits.

yeah, bloody brokers - although it is worth bearing in mind that all charts in MT4 are based on Bid price, the Ask price (which a buy stop would have been filled on) would have been the difference + the spread higher.

Therefore with this in mind wouldnt the entry for a Buy stop only be the HH, + 1pip, + the spread

for a sell stop it would remain at the LL + 1 pip

I might need to think about that

Though to be perfectly honest all my confusion came about because i didn't see the "." before the 8

Regards
John
  • #1,411
  • Mar 8, 2011 1:52pm Mar 8, 2011 1:52pm
Quoting jmw1970
yeah, bloody brokers - although it is worth bearing in mind that all charts in MT4 are based on Bid price, the Ask price (which a buy stop would have been filled on) would have been the difference + the spread higher.

Therefore with this in mind wouldnt the entry for a Buy stop only be the HH, + 1pip, + the spread

for a sell stop it would remain at the LL + 1 pip

I might need to think about that

Though to be perfectly honest all my confusion came about because i didn't see the "." before the 8

Regards
John
++++++++++++++++++++++++++++++++

.8, period 8, point 8, hey dude were splitting hairs here, so no worries (see icon)

Whoa, tell me about it. Just when I think I get the bid/ask, buy/sell entry order/exit order thing figured out, omg, I find myself saying "What just happened!" after I got it wrong again. (In my humble attempt to be a "Good Threadster" I kindly left the "tf" out of the "What" statement. After all, what would Moms think!)

I also love how close the "buy/sell" and "Close" buttons are on MT4 window that should be dedicated to "Close", since that's what the menu option is that I just selected, duh!. Twice in the last 2 weeks I've clicked the Sell button instead of the Close button, trying to lock in profit. Fortunately it was on a Demo Oil account.

As you can see I'm blathering on here. So back to thread discussion, or Broker Lynching, or whatever suits your fancy.

"May your next 'Spike' be what a dear friend does to the punch bowl."
~ Anonymous
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  • #1,412
  • Mar 9, 2011 3:43am Mar 9, 2011 3:43am
I had a E/U trade today that failed. Please have a look at this post and offer any clues what went wrong.

Thanks,
Darryl

http://www.forexfactory.com/showpost...&postcount=853
  • #1,413
  • Mar 9, 2011 9:44am Mar 9, 2011 9:44am
Quoting diamonddbw
I had a E/U trade today that failed. Please have a look at this post and offer any clues what went wrong.

Thanks,
Darryl

http://www.forexfactory.com/showpost...&postcount=853
i see only that the time was before the opening and that is not a good time for 1-2-3 patterns.
the pattern itself is perfect.
trading is like dancing, don't think and just listen to the music!
  • #1,414
  • Mar 9, 2011 6:50pm Mar 9, 2011 6:50pm
Quoting birdland
i see only that the time was before the opening and that is not a good time for 1-2-3 patterns.
the pattern itself is perfect.
++++++++++++++++++++++++++++++++

Thanks for checking BL. FYI I also saw what I thought was a flag trade (http://www.forexfactory.com/showthre...280673&page=57) happen within the same set up. My thoughts were "Confluence" of 2 of some primo techniques, just had to be a winner. Folks on the other post mentioned the early time as well as no Negative Divergence. So that was a very good lesson. Plus when I saw the trade go from +10 to -5 I bailed early. Not a big loss but merely a brused psyche.
  • #1,415
  • Mar 15, 2011 5:38pm Mar 15, 2011 5:38pm
Wondering where this will go...........
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  • #1,416
  • Mar 16, 2011 10:41pm Mar 16, 2011 10:41pm
Quoting forex1962
Wondering where this will go...........
been trying that indy and I don't think I like it much. seems to miss some trades.
  • #1,417
  • Mar 17, 2011 2:30am Mar 17, 2011 2:30am
Very nice....that's a couple of days off for me now!
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  • #1,418
  • Mar 17, 2011 9:13am Mar 17, 2011 9:13am
question for Paulus or anyone who really knows.
Let's say I'm watching for a long 1-2-3 to fill in the 1 and 2.
If the bar next to what I called point 1 is exactly the same low as that point 1 low or if the bar next to what I called point 2 has exactly the same high as my point 2, will that matching bar still be counted as 1 of the 2 required intervening bars between a 1 and 2 or a 2 and 3?

(Not sure because although it is a different circumstance, Paulus wants point 3 to be at least 1 pip higher than point 1's low.)
  • #1,419
  • Mar 17, 2011 3:03pm Mar 17, 2011 3:03pm
Quoting simpletrades
question for Paulus or anyone who really knows.
Let's say I'm watching for a long 1-2-3 to fill in the 1 and 2.
If the bar next to what I called point 1 is exactly the same low as that point 1 low or if the bar next to what I called point 2 has exactly the same high as my point 2, will that matching bar still be counted as 1 of the 2 required intervening bars between a 1 and 2 or a 2 and 3?

(Not sure because although it is a different circumstance, Paulus wants point 3 to be at least 1 pip higher than point 1's low.)
I'm not saying I 'really know' but to me I would count it if I'm understanding you right, what would concern me though is if your point 3 pulled back to within 1 point of point 1, I wouldn't want to see a pull back beyond the 23.6 fib.
  • #1,420
  • Mar 17, 2011 7:45pm Mar 17, 2011 7:45pm
Quoting forex1962
I'm not saying I 'really know' but to me I would count it if I'm understanding you right, what would concern me though is if your point 3 pulled back to within 1 point of point 1, I wouldn't want to see a pull back beyond the 23.6 fib.
Thanks, i lean towards it counting too.
Its interesting that you mention the 23.6 because I started trading oil or wanted to--Transact has been screwed up the last 2 days so live trading was not a choice--but on such a volatile chart as the 30 sec, i have been trying to decide if a number 3 close past the 50% should kill the setup or not. Maybe i'll replace 50 with 23.6 and see how it played out.
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