BRILLIANT POINT
trading the 1-2-3
- Thread starter padutrader
- Start date
this is perfect place to trade two legs....as bpa practitioners will agree...the leg marked by green trendline should go below that marked by the blue one,which it did see chartthe problem with 1 2 3 formations (at least for me) there can be some subjectivity involved , what you could identify as 1, 2 , 3 is not necessarily the same for me. I got this 1, 2 3 and ross hook indicator helping me at times (at least least to try make it more objective) , though it doesn't seem to be very accurate (you can tweak the bar counter i think) and if the trend isn't so strong there can be 1,2, 3 lows and highs at the same time, making the decision to trade more obscure.
you see this 1-2-3 in eurusd would you take the short? should you be looking to short at all?
actually the short would have worked!
Padutrader,
Just a suggestion...
If you are looking to become consistent and thus confident with the 123 setup just see if you can identify only the first setup of the day and then sim trade it/write it down. If you analyze, and analyze again, oh, did I mention analyze, this one and only trade you will begin to see some of its nuances.
But more importantly, as Xela has mentioned, is having a directional bias that allows you to view this setup correctly without getting confused. For example, use the open as your line in the sand, if you are above the open look for a long setup only and vice versa for a short.
(Generally you should have one tradable setup a day off of your line in the sand. Multiple setups might present themselves on strong trending days but on most days you don't want to be looking for the 3rd 123 setup long when the market has over extended itself from your line in the sand.)
And for Narayana's sake, this pattern is not 3 bars next to each other. It is a multi-bar pattern. Think about it - multiple bars means multiple traders, multiple traders means more money vested in a direction, more money vested in the leg down from point 2 to point 3 will be the panicking money that gets you a decent move upon the breakout above point 2 (long example)
Just a suggestion...
If you are looking to become consistent and thus confident with the 123 setup just see if you can identify only the first setup of the day and then sim trade it/write it down. If you analyze, and analyze again, oh, did I mention analyze, this one and only trade you will begin to see some of its nuances.
But more importantly, as Xela has mentioned, is having a directional bias that allows you to view this setup correctly without getting confused. For example, use the open as your line in the sand, if you are above the open look for a long setup only and vice versa for a short.
(Generally you should have one tradable setup a day off of your line in the sand. Multiple setups might present themselves on strong trending days but on most days you don't want to be looking for the 3rd 123 setup long when the market has over extended itself from your line in the sand.)
And for Narayana's sake, this pattern is not 3 bars next to each other. It is a multi-bar pattern. Think about it - multiple bars means multiple traders, multiple traders means more money vested in a direction, more money vested in the leg down from point 2 to point 3 will be the panicking money that gets you a decent move upon the breakout above point 2 (long example)
There's a pretty cool indicator for NT that has a fully automatic 1-2-3 setup (PriceActionSwing).
no1 i am really glad you are taking a lot of trouble to mark your chart and post it.Most traders here just want one line explanation on how to make millions of usd. this discussion will help all of us.you really have the right attitude to become a successful traderthe problem with 1 2 3 formations (at least for me) there can be some subjectivity involved , what you could identify as 1, 2 , 3 is not necessarily the same for me. I got this 1, 2 3 and ross hook indicator helping me at times (at least least to try make it more objective) , though it doesn't seem to be very accurate (you can tweak the bar counter i think) and if the trend isn't so strong there can be 1,2, 3 lows and highs at the same time, making the decision to trade more obscure.
NO2 this pattern may be used as a continuation and reversal set up:you must decide what it is you are using it as.in both cases there must be something to continue or something to reverse.
NO3Xela has brought up a very good point about RR ; go with a 1:1 unless some other technical reason suggests something else
NO4 any inside bar/s[such as NR7s] is a 123 setup on both sides:buy and sell. Brooks has said you can trade a breakout of the inside bar on either side.This offers the most value for your buck and perhaps affords a much higher RR.it may be better to take the trade in the direction or bias that the inside bar has;meaning if the inside bar is up. then take only long breakouts.
NO5any breakout of a 2 point which goes straight into resistance must be taken with caution.
NO6 if you are trading 5 min there may be no point to take the really 'big' 123 setups
thank you you are an experienced trader, it shows! i will try and apply it
yes that is 123 in a higher time frame,am i right?
yes it does i think you could go with a higher RR if you have multiple technical reasons for taking atrade