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  • #141
  • Jul 16, 2011 5:49pm Jul 16, 2011 5:49pm
Breaking of the trendline and the number 2 at the same time. That's gotta be good for business? Maybe my problem was that I always drew the trendline first then tried to find a 123 that fit it. But trendlines need to be adjusted. What I am doing differently here is finding the 123 then looking for an existing trnedline
  • #142
  • Jul 16, 2011 5:50pm Jul 16, 2011 5:50pm
Here is the chart I was talking about above
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  • #143
  • Jul 16, 2011 6:02pm Jul 16, 2011 6:02pm
OK ignore the first setup on the chart already documented that. Look at the second set up. We have a 123 with resistance forming at 1.3575 and the number 2 is taken out. So without the trendlines we would be in a trade and would have been stopped out. It may appear that the trendline broke and gave confirmation but in my book 2 points do not make a trendline. You need atleast three. So if you were trading this strategy you would not have taken this trade as all criteria is not met.

If we then look at the 1a2a3a setup you can see there was indeed a viable trendline and it was broken BUT the number 2a was not broken so no trade. So the trendlines did indeed keep us out of trouble in this instance.
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  • #144
  • Jul 16, 2011 6:02pm Jul 16, 2011 6:02pm
There is a secret, but i can't tell it to you, but if you paypal me $100 to [email protected] I will share with you the secret to making money!!

Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #145
  • Jul 16, 2011 6:08pm Jul 16, 2011 6:08pm
Our original trendline from the previous post is extended and now we can see another 123 formation. This time we have the number 3 point of the 123 finding resistance at the trendline after having already broken it.. So both the number 2 and trend line broke and we have a successful trade
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  • #146
  • Jul 16, 2011 6:20pm Jul 16, 2011 6:20pm
If you look at this trade it appears all criteria met...

-around london open
-trendline is valid and is touching 3 swing lows
-forming at major psych line 1.36000
-break of trendline
-break of number 2 of 123

Too bad we only got 9 pips though Could have doubled or tripled your lots on this to adjust to you average $ value per trade.
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  • #147
  • Jul 16, 2011 6:30pm Jul 16, 2011 6:30pm
Quoting puppypippy
Like Joe Ross states it is a law of charts. It is simply (for a long) sellers selling and then taking profits causing a pullback and then what should be a continuation of lowers lows in a downtrend fails when the last low is not taken out and instead the latest high is. You know something is up because basically a downtrend is the breaking of lows and an uptrend the breaking of highs.

It's this failure that results in a trend reversal.
Exactly. In fact a winning trader is simply a trader who knows how to profit from the emotions of other less disciplined traders, that's why the 1 2 3 pattern seems to be working fine most of the time.

Well take care for now folks, time for a cold one for me, enough Forex for today
  • #148
  • Jul 16, 2011 6:55pm Jul 16, 2011 6:55pm
Quoting Mr Breakout
Exactly. In fact a winning trader is simply a trader who knows how to profit from the emotions of other less disciplined traders, that's why the 1 2 3 pattern seems to be working fine most of the time.

Well take care for now folks, time for a cold one for me, enough Forex for today
Ha ha ha It's 9.55AM in the morning here in Oz. I take it you are not downunder? If you are I would be very worried - about having a cold one so early in the morning LOL
  • #149
  • Jul 16, 2011 6:59pm Jul 16, 2011 6:59pm
all conditions met except maybe a little late in the UK day? Still worked out OK
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  • #150
  • Jul 17, 2011 5:29am Jul 17, 2011 5:29am
Obviously I am not taking these happy snaps live as the market is closed. But I am not cherry picking either. I have gone back in time and moving one bar ahead at a time using th F12 key in metatrader. These backtests could just as easily fail and when they do I will post them too
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  • #151
  • Jul 17, 2011 5:46am Jul 17, 2011 5:46am
Now here is a tricky one

-trendline only touching two points until the last minute when the no.3 of the 123 goes back to test it as support, giving us the required 3 touches of the TL.
-little late in the UK day but acceptable still volume in the market.
-Look at that number 2. could that be any closer up against the 1.3575 psych line LOL
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  • #152
  • Jul 17, 2011 6:16am Jul 17, 2011 6:16am
to watch on Monday
.
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  • #153
  • Jul 17, 2011 11:23pm Jul 17, 2011 11:23pm
Quoting balrog
Here's an indi that puts the heiken ashi into bars at the bottom of your chart while still looking at the traditional candles themselves. In my chart earlier you wll see the white/red bars at the bottem correspond to the ha candles.. I only put the heiken ashi candles on my chart to demonstrate..

Balrog.


A note about the 3 level zz semafor, it repaints.
Thanks for this heiken ashi indicator.
  • #154
  • Jul 18, 2011 3:33am Jul 18, 2011 3:33am
Hi folks I am long on the aussie. Wish me luck LOL
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  • #155
  • Jul 18, 2011 8:05am Jul 18, 2011 8:05am
New trade in EU, AU still open

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  • #156
  • Jul 18, 2011 2:58pm Jul 18, 2011 2:58pm
The only way to backtest chart patterns (rectangle, triangle, 1 2 3 formation, etc..) is to use the old point and figure chart system.

In the case of the 1 2 3 pattern, the trader only needs to define (and experiment with) the size of the boxes for point 1 and 2.

To the best of my knowledge, the only author who has been able to test the alleged predictive power of some of the most popular chart patterns - via the point and figure system - is Michael D. Archer in his book "The Forex Chartist Companion: A Visual Approach to Technical Analysis".

Interestingly enough, and contrary to popular belief, some of the well known chart patterns simply do not work, or generate very little profit in the long run, at best, once they are submited to a thorough backtesting.

Bottom line : traders should always test, test and test some more, and never take any trading idea/system for granted, regardless of its appeal and "logic".
  • #157
  • Jul 18, 2011 4:13pm Jul 18, 2011 4:13pm
Quoting Mr Breakout
The only way to backtest chart patterns (rectangle, triangle, 1 2 3 formation, etc..) is to use the old point and figure chart system.

In the case of the 1 2 3 pattern, the trader only needs to define (and experiment with) the size of the boxes for point 1 and 2.

To the best of my knowledge, the only author who has been able to test the alleged predictive power of some of the most popular chart patterns - via the point and figure system - is Michael D. Archer in his book "The Forex Chartist Companion: A Visual Approach to Technical Analysis".

Interestingly...
Agree with your bottom line statement but it is easy to back test the 123 and you don't need point and figure. It is successful more than not. And like any pattern is asking to be confirmed.

Just go ahead and hit the back arrow then move ahead one candle at a time with F12 (metatrader) Try different ways to confirm the patter to see what works and what doesn't.
  • #158
  • Jul 18, 2011 4:16pm Jul 18, 2011 4:16pm
Stopped out! Hey if this system didn't lose then it would go viral and everyone would use it to milk the forex market and then it would no longer work This system actually relies on people saying and believing it doesn't work, placing their stops just above the number 2 point
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  • #159
  • Jul 18, 2011 4:17pm Jul 18, 2011 4:17pm
Stopped out of AUD
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  • #160
  • Jul 18, 2011 4:20pm Jul 18, 2011 4:20pm
I neglected to put the psych lines on the AUD and wanted to add the 21 EMA too to further analyse this trade. Neither of them had any resistance from the no. 2 point. DOH!
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