Simple 1-2-3 reversal PA scalp

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Cool, i like it. So no TP right? Your'e trailing 5 pips until you get stopped out?

yes.... But If the market moves really fast, then I'll trail by 10 pips...

How many candles to make a 123?

Minimum of three bars... as long as there is an "obvious" reversal bar (bar#2)... and "obvious" means that bar #1 (which proceeds the reversal bar and can be 1-3 bars away from the reversal bar; see figure below) has a higher high than bar #2 (when buying dips) or a lower low than bar #2 (when selling rallies).... the trigger bar (bar #3) can be many bars away from bar#2 as long as no intervening bars nullify the 1-2-3 setup (i.e. the low of an intervening bar doesn't dip below the low of bar#2 during a buy reversal setup, or the high of an intervening bar doesn't pop above the high of bar#2 during a sell reversal setup). From my experience, it's extremely important to be vigilant about moving your trailing stop to BE+1 as soon as the market moves 5-10 pips in your favor (I generally move it after 5 pips) because you are buying/selling a lot of dips/rallies. The goal is to immediately get to breakeven and then see if the market breaks out thereafter. There doesn't seem to be an "optimum" pattern of 1-2-3 formation that ensures a large move; a lot of times the less obvious 1-2-3 reversal (i.e. small dip/rally) proceeds a large market move....it seems that the more conditions I placed on the 1-2-3 to optimize the pattern (including trading in the direction of a higher time frame trend), I was more likely than not to miss a big move...



Best,

Dave

You sound a lot like me.. Moving stop to BE+1 ASAP. I do something similar but I enter at bar open.

Will start the trade explorer on Monday, May 23..... The first post has been edited to explain how to trade the 1-2-3 patterns in conjunction with trend line breaks in the direction of a higher time frame trend.. this considerably cut down the number of whipsaws, but at a cost of missing a few major counter trend moves as mentioned in post #5... Anyway, please feel free to ask questions or post your own results using 1-2-3 patterns and/or trend line breaks...

Trend line break thread...

http://www.forexfactory.com/showthread.php?t=163012

Appears to be a breakout rather than a reversal, IMHO.

Hi TooSlow,

Whether it's called a "reversal" or "breakout"...its just a matter of nomenclature. When the trend line is down and price "breaks out" above the line and starts a counter move, I call it a "reversal"... vice versa if price reverses and "breaks" below an uptrend trend line... the most important facet is that the trade is pip positive!

Best of trading to you!

Dave

So long as it makes pips 😁

Currently watching USDCAD.

Chart 1 shows an upside trendline break on the 60 min chart...the yellow line represents the buy trigger price at 1.3116.
NOTE: if price drops below the trendline at ~1.3107, this would indicate that the downward trend is still intact, and I'll look for 5 min trendline breaks to the downside...



Chart 2 shows the upside trendline break on the 5 min chart with the yellow trigger at 1.3116. The initial stop-loss (aqua line) is at 1.3109 (7 pips). I want to take the trade, but the current spread (Oanda) is 10 pips... I'll wait until the spread drops to a max of two pips and then reassess the trade...

USDJPY hourly is in downtrend.... 5 min chart showed trend line break to the downside... opened USDJPY sell @ 108.859 (yellow line); initial stop-loss @ 108.94 (aqua line) - 5 min chart. Will move stop to BE+1 as soon as the trade reaches +10 pips, and then to BE+10 at +15 pips...will trail 10 pips thereafter....

Note: ended up buying USDCAD @ 1.31235 (yellow line)...the hourly trend had just broken to the upside (see post 11) but waited to enter until the spread dropped to 2 pips.... as you can see from the image below (5 min chart), I got in late.. was stopped out for a 10 pip loss (aqua line).

Update... was stopped out of the USDJPY trade @ 109.685... (+17.4 pips)...

Unfortunately, since I don't trade full-time, there's no way that I'll be able to update this journal as I'm doing now once the workweek starts, so I'll just post a few images (good & ugly) nightly with an account update... although you can see the Trade Explorer for real time updates to the account...

Best,

Dave

Thanks for your input Dave.

I'm not quite clear on how entry is selected in picture 4 on your first post. I understand why you're using high/low of swing bar. Can you help me to understand why you choose bar 'Prior' to swing bar in pic 4 please?

Thanks,
Darryl

Hi Darryl,

Generally for a 1-2-3 setup, the "price point" bar (bar #1) is a bar prior to the swing high/low (Bar #2)... I described this more fully in post #5. But with that said, the confusion comes in picture 3 of post 1 where the buy limit order was placed just above the high of the swing low bar itself . The reason for this was that the high of the swing low bar was higher than the high's of the two subsequent inner bars. Otherwise, the price point bar would have been the bar immediately prior to the swing low bar (bar marked with the blue arrow)..



Best,

Dave

Hi Dave. After taking a closer look at what I 'Believe' you are trying to show us, I made a short (5 min) video for the purpose of getting your feedback.
I have NO intention of either Hijacking this thread, or, Attempting to show Anyone "how to" trade your set up!

Thanks in advance for your comments.

Hi Darryl,

Great video! I would taken the same trades as described in the video, but would have included the first setup that you described which would have been a breakeven trade for me (I don't use a pip threshold to get into a trade..). If you have any questions please feel free to ask.. the thread has been dormant and I apologize for that.. Anyway, have you been trading this method? If so, how are you doing? I did mention in the first post that I do take many low-pip losses and BE trades...

Best,

Dave

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Not trading it yet. But all of the historical charts I've looked at so far, definitely look worthy of my attention.

You said you would have taken the 1st trade in vid, and I get it. I'm just a stick in the mud and like a bit more confirmation. With GJ losing a pip or 2 is no big deal, since most of it's moves are at least 15.

Looking forward to more of your trade charts.
Thanks

Hi Daryl,

When you start to trade please feel free to discuss the trades here... I'll be a bit more diligent in posting charts as well...

Best,

Dave