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123PatternsV6 revisited

  • #41
  • Edited 3:03pm Nov 21, 2011 2:44pm | Edited 3:03pm
Welcome Joeyd, I like your description 'no frills' and 'cuts through the fog'. I see Zigzag as the basis of this 'fog' cutting. I just want to focus on what is important, not get distracted by all the little price gyrations.

This post is a followup to my suggestion to start on 5m charts.
Quoting robdee
As a learning exercise I suggest using 5 min timeframe. You'll get a lot more practice because patterns come along more frequently.
On a 5 min chart we are operating on a smaller scale. The average distance between the three price points is less. Friday 18 was a textbook perfect example of where 123 patterns show how useful they can be.

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd-2011-11-18-m5-basic.gif Size: 19 KB


How do we describe and recognise these ideal conditions - as they are happening ?
That is the challenge, that is the goal of this thread.

Robdee
  • #42
  • Nov 21, 2011 2:51pm Nov 21, 2011 2:51pm
i like the 123s a lot however i often have trouble finding where to get in. so i tried different indicators to try and see how much power there is behind a move. sometimes i get it right and sometimes i dont. so this thread will be intresting to watch
  • #43
  • Edited 3:07pm Nov 21, 2011 3:00pm | Edited 3:07pm
Quoting davidtrader
how i can change 123 alarm indicator set up for zigzagdepth=12?
Good question.

123Alarms uses the default setting from 123PatternsV6.mq4

The only way to change that default setting is to edit the code and recompile the indicator.

 

  1. MT4 menu Tools.Metaquotes Language Editor F4
  2. Open the file called 123PatternsV6.mq4
  3. Look for this line
    extern int ZigZagDepth = 1;
  4. Change it to the new value
    extern int ZigZagDepth = 12;
  5. Recompile

I forgot about this because in the old thread we were using rangebars and ZigZagDepth=1 was best setting for constant rangebar charts.

Robdee

To download 123Alarms see post #27

  • #44
  • Nov 21, 2011 5:42pm Nov 21, 2011 5:42pm
This post shows the same basic setup with one more layer added.
I call this layer Fibo Targets.

Fibonacci retrace tool is used to draw one fibo with five levels configured at 0.0, 0.5, 1.0, 2.1, and 3.8. The fibo is always drawn starting at price point 2. The fibo is then stretched out to price point 3. If that looks too small then I drag the fibo further out to price point 1.

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd-2011-11-18-m5-fibos.gif Size: 21 KB


This is the only variation I use with the basic setup. Start drawing at 2, drag to 3, if that is too small, drag to 1 (instead of 3). So the fibo's dotted line will always show on the chart as linking either 2-3 or 2-1.

Robdee
  • #45
  • Nov 22, 2011 2:37am Nov 22, 2011 2:37am
Hi Rob

I Assume these signify a buy or sell, but I was wondering why they don't always appear even though there may be a buy or sell Arrow ?
Attached Image (click to enlarge)
Click to Enlarge Name: Capture.PNG Size: 22 KB
  • #46
  • Nov 22, 2011 2:45am Nov 22, 2011 2:45am
Hello Robdee
I have your indicator setup on a chart for the last few days,and have notices when the 123 setup arrow prints on the chart it also shows the round coloured dots to show the candles that form the 123.
However sometimes the arrow shows when the candle closes without the round coloured dots and i then refresh the indicator and the arrow dissapears would this not be a confirmed 123 or does the indicator repaint ?
Regards
  • #47
  • Nov 22, 2011 3:05am Nov 22, 2011 3:05am
Quoting simmo24
I Assume these signify a buy or sell, but I was wondering why they don't always appear even though there may be a buy or sell Arrow ?
Hi simmo24, the dots identify price points that make up the 123 pattern, arrows signify the 'break' part of the pattern. A decision to buy or sell depends on all the factors including things like timing and previous price action.

In the next version of 123Patterns I will not be using arrows to highlight the break candles. I will use some other method that does not seem to say 'buy here' and 'sell here' like arrows do. Arrows tend to make people think, "OK time to trade" which is not right.

In the chart that you posted you have not switched off ShowAllLines and ShowAllBreaks therefore you are seeing arrows that are not associated with ideal 123 patterns. In other words you are seeing arrows that are associated with distorted 123 patterns. The basic setup I have been explaining requires ShowAllLines=false ShowAllBreaks=false ShowTargets=False ZigZagDepth=12.

 

  1. Dots show only the 123 price points for ideal patterns
  2. No dots will show on 123 price points for distorted patterns
  3. Arrows point to the first candle closing beyond #2, the start of the break

Does that answer your question ? hope so.

Robdee

  • #48
  • Nov 22, 2011 3:10am Nov 22, 2011 3:10am
This is the only variation I use with the basic setup.
Start drawing at 2, drag to 3, if that is too small, drag to 1 (instead of 3).

how about too small? this means in pips(how pips) or lengh of 2 wave or ...?
  • #49
  • Nov 22, 2011 3:23am Nov 22, 2011 3:23am
Quoting qprfc
sometimes the arrow shows when the candle closes without the round coloured dots and i then refresh the indicator and the arrow dissapears
If there are no coloured dots when the arrow appears this sounds to me like ShowAllBreaks=true which allows break arrows to show on distorted patterns. Distorted patterns are not well defined and it is possible that an arrow could be printed only to be erased again after more price action pushes the ZigZag price points further out. I have seen this occur.

It is also possible that you are using ShowAllBreaks=false and there is some kind of repaint problem with the indicator that I am not yet aware of. I switch MT4 chart profiles quite often which means my indicator displays are being refreshed often so I certainly could miss something like the repaint you describe.

Robdee
  • #50
  • Nov 22, 2011 3:40am Nov 22, 2011 3:40am
hi every body
thanks for nice answers
which fibonachi is correct? pic1 or pic 2
please show me the entry point and sl
best regard
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gbousd m5.gif Size: 13 KB
Click to Enlarge Name: gbousd2 m5.gif Size: 13 KB
  • #51
  • Nov 22, 2011 4:10am Nov 22, 2011 4:10am
Quoting robdee
Hi simmo24, the dots identify price points that make up the 123 pattern, arrows signify the 'break' part of the pattern. A decision to buy or sell depends on all the factors including things like timing and previous price action.

In the next version of 123Patterns I will not be using arrows to highlight the break candles. I will use some other method that does not seem to say 'buy here' and 'sell here' like arrows do. Arrows tend to make people think, "OK time to trade" which is not right.

In the chart that you posted you have...
Perfectly thanks. Just re-read the post about distorted patterns. I was happy enough with the concept of price zones. Now you've reminded me about distorted patterns, all has become clear.
  • #52
  • Nov 22, 2011 5:56am Nov 22, 2011 5:56am
Thx Robdee for the detailed answer,regarding the dots,issue resolved.
The 2 times that i have refreshed the indicator and the arrow has gone was when there were no dots present.
However i love this indicator using it over the last days has got me 325 pips.
Regards
  • #53
  • Nov 22, 2011 6:53am Nov 22, 2011 6:53am
Quoting qprfc
Thx Robdee for the detailed answer,regarding the dots,issue resolved.
The 2 times that i have refreshed the indicator and the arrow has gone was when there were no dots present.
However i love this indicator using it over the last days has got me 325 pips.
Regards
Hi Qprfc

What timeframe are you using it on ?
  • #54
  • Nov 22, 2011 11:16am Nov 22, 2011 11:16am
Quoting qprfc
i love this indicator using it over the last days has got me 325 pips.
Glad to hear you're getting positive results
  • #55
  • Nov 22, 2011 11:35am Nov 22, 2011 11:35am
Quoting davidtrader
which fibonachi is correct? pic1 or pic 2
They are both drawn correctly. It is a matter of choosing which one you prefer. I prefer 2-1 in that situation. What concerns me is that your chart shows prices breaking below #3, that is a bearish sign for sure.

Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd-2011-11-22-m5-basic.gif Size: 20 KB


Quote
please show me the entry point and sl

Stop Losses - what I do

Robdee
  • #56
  • Nov 22, 2011 1:57pm Nov 22, 2011 1:57pm
Quoting robdee
They are both drawn correctly. It is a matter of choosing which one you prefer. I prefer 2-1 in that situation. What concerns me is that your chart shows prices breaking below #3, that is a bearish sign for sure.

Attachment



Stop Losses - what I do

Robdee
hi and thanks for best answers
in above pic in up trend move where can we enter?if distance from buy zone and 50 fibonachi level are much after break point 2 price retrace
which inters are correct:
we can set buy limit order in buy zone or we set buy limit in 50 percent fibonachi level?
  • #57
  • Nov 22, 2011 4:16pm Nov 22, 2011 4:16pm
Quoting davidtrader
we can set buy limit order in buy zone or we set buy limit in 50 percent fibonachi level?
My general rule is placing the buy limit orders inside the buy zone.

In the chart you posted there is a problem because some candles are closing below 3. That is bearish. So, in that specific situation I will not be trading an uptrend because those bearish closes mean the bullish 123 pattern is no longer valid.

Attachment

Another way to look at this is to oberve the poor quality of the break. Yes one candle closed above 2 but then the very next candle closed below 2. There is no follow-through on the break so it is not good quality. When I see this it makes me suspicious that it is a fake-out not a break-out.
  • #58
  • Nov 23, 2011 1:25am Nov 23, 2011 1:25am
As a forex trader, what data can I ignore?

More specifically, when looking for trade setups, what data can be ignored? This is a question I asked in a poll last year. Many traders have many systems and various rules. However most of them can agree on a few categories of data that can safely be ignored.

Which ones do you think can be ignored?

Time of day (eg London Open, London Close)
Volume and changes in Volume
Wicks on candles (upper and lower)
The range of candles (high - low)
Patterns (channels, triangles, waves etc)
Technical analysis 'news' posts on FF news page

Or to put this another way, what data should not be ignored?

Click here to vote in the poll and see the results.

And now from yesterday's NY session, one sell pattern was successful, followed by three buy patterns that fail, what makes the difference ?

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd-2011-11-22-m5-basic.gif Size: 24 KB


Any ideas?

Robdee
  • #59
  • Nov 23, 2011 2:38am Nov 23, 2011 2:38am
Quoting robdee
As a forex trader, what data can I ignore?

Robdee

greetings everyone,

may i ask you robdee, regarding this method, on what sessions do you normally trade this setup? do you stick on M5 alone and disregard higher TF's, and trends?

regards
frank
  • #60
  • Nov 23, 2011 3:06am Nov 23, 2011 3:06am
Quoting alrightfrank
what sessions do you normally trade this setup? do you stick on M5 alone and disregard higher TF's, and trends?
Frank, kamusta ang buhay ?
I am looking for liquidity > average so that means trading 6:30 to 18:30 GMT (12 hours of good liquidity).

I use 123PatternsV6 on M5 to gain understanding of correct use. Later I may migrate to higher TFs when I understand 123 patterns very well.

For big picture analysis, trends, overbought/oversold areas I use 200MA, fibos, and CCI(14) on H4 chart.

For fundamental risk-on versus risk-off sentiment I use SP500 futures daily chart combined with NYSE TRIN index closing values.

O sige, aalis na ako

Robdee
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