1-2-3-Formations and Ross Hooks

[frugi]

No worries and thanks pogle.

The 15:34 bar was a potential #3 point but the 15:42 made a lower low, thus negating its potential without a buy order having been triggered first (since the high of the 15:34 bar was not taken out). I take entries from the break of a potential #3 bar's hi/lo, not that of any bars that follow. A potential #3 point is negated if its low is taken out by a subsequent bar. Actually the 15:42 bar negated the whole 123 long setup as it made a LL than the first #1 14:58 bar. A new #1 means start looking for #2 and #3 again, obviously.

(I'm assuming here that the 15:42 bar broke the H of the 15:38 bar triggering an entry before retreating below the 15:34 bar).

It did break the high of the 15:38 bar but there was no entry triggered as the 15:38 bar was not a potential #3 point as it had a HL than the previous bar which was the potential #3 point.

Confused? I am.

I leave the trailing stop where it is if a bar makes a LL than the previous bar (for longs). So when the 16:50 bar closed I move it to 491, below the previous bar low. The 16:54 and 16:58 bars made LLs without taking out 491 (miraculously) so it stayed where it was.

 

[frugi]

And the one I've just traded, which may make things clearer. They're not usually this kind I can assure you!

 

[pogle]

No worries and thanks pogle.

The 15:34 bar was a potential #3 point but the 15:42 made a lower low, thus negating its potential without a buy order having been triggered first (since the high of the 15:34 bar was not taken out). A potential #3 point is negated if its low is taken out by a subsequent bar. Actually the 15:42 bar negated the whole 123 setup as it made a LL than the first #1 14:58 bar. A new #1 means start looking for #2 and #3 again, obviously.



It did break the high of the 15:38 bar but there was no entry triggered as the 15:38 bar was not a potential #3 point as it had a HL than the previous bar which was the potential #3 point.

I was thinking that the 15:34 bar may have been considered the potential #3 point. This would have been confirmed by the HL of the 15:38 bar and the HH of the 15:42 bar. I'm assuming here that this HH was made before the bar subsequently formed the LL. I suppose the question is this: Do you enter immediately the HH occurs, or wait for the bar to complete in case it forms a LL (as happened here) and then enter when the next bar makes the HH? I need to get my Joe Ross documents out again and re-read.

The second option is certainly safer, but at the expense of a few points (as always in this lark!)

Confused? I am.

I leave the trailing stop where it is if a bar makes a LL than the previous bar (for longs). So when the 16:50 bar closed I move it to 491, below the previous bar low. The 16:54 and 16:58 bars made LLs without taking out 491 (miraculously) so it stayed where it was.

[/QUOTE]

Sorry, I've just read your post properly. You move the stop up to the L of the *previous* bar (not the bar that's just closed as I initially read it).

Many thanks frugi

pogle

 

[frugi]

Pogle,

I was thinking that the 15:34 bar may have been considered a potential #3 point.

Spot on. It was, as soon as it closed. The next bar does not alter this view.

This would have been confirmed by the HL of the 15:38 bar ...

I think the textbook definition requires one HL and one HH in the next 3 bars to confirm a #3, but not necessarily (as I do) a HH that reaches above the high of the potential #3 bar. In this case we only saw a HL - if the next bar or two had sported a HH then the #3 would be textbook confirmed, I think, but I would not have entered.

As far as my "final confirmation" is concerned, one HL and one HH do not complete a #3 point trade alone: they set it up, and fulfil the Ross definition, but a HH penetrating above the potential #3 bar would also be required as a final trigger for entry.

... and the HH of the 15:42 bar.

As before, if this bar had made a HH than the 15:34 bar, then, yes, at this point the #3 point is frugi-confirmed. However it did not, it only made a HH than the 15:38 bar and in any event negated the whole setup by then making a LL than both previous bars.

I think I follow the Ross definition for #2 points: e.g. a #2 high (at a low) would be confirmed by a LH and a LL in the next few bars, as long as the #2 high was not penetrated.

I still struggle with the #2 and #3 points being on the same bar, but the clouds are slowly clearing

I suppose the question is this: Do you enter immediately the HH occurs, or wait for the bar to complete in case it forms a LL (as happened here) and then enter when the next bar makes the HH? I need to get my Joe Ross documents out again and re-read.

I enter as soon as the high of a potential #3 point is taken out (assuming of course that its low hasn't been first). The risk is that once in a long position, its low can subsequently be taken out, stopping me out and negating its potential to be a #3.

If I waited for the trigger bar to complete (i.e. finally confirm or negate the #3 point formed by a previous bar) then I may miss some points. Equally I may avoid being stopped out. C'est la vie.

Sorry if this sounds pedantic and gives the impression that I don't think you've understood - far from it - I'm simply confirming a lot of this in my mind by writing it down, to be honest.

*has ominous feeling that 5 setups in a row will now fail tomorrow*

Edit: Changed a few sentences having thought about it properly and learnt something new.

 

[pogle]

Sorry if this sounds pedantic and gives the impression that I don't think you've understood - far from it - I'm simply confirming a lot of this in my mind by writing it down, to be honest, and the few microns added to my edge are a fair price to pay for consistency!

Also Joe Ross may treat the setup criteria differently - i.e what I've just written may well be a frugi flavour not a textbook definition. But hey, it's a free system and it works. I needn't add that position sizing, max stop loss, scaling out criteria etc. are all vital ... and context helps too.

No, it doesn't sound pedantic at all. It's just highlighted the fact that we're using slightly different definitions. I use a bit from the Joe Ross definition that you don't, but then I don't use other parts of the JR stuff because it doesn't work for me. The only 'right' answer is one that works for you.

As you say, writing all this stuff down helps in itself because it makes you think about the specifics rather than the generalities.

Regards

pogle

 

[frugi]

Cool, thanks pogle. I sounded like a smug schoolteacher back there.

The only 'right' answer is one that works for you.

Absolutely.

 

[commander-keen]

1-2-3 and Joe Ross

Hi guys have read most of the entries here and have started trading the 1-2-3 a while back after reading Joe's "Day Trading". One thing I wanted to know is does anyone trade with Mark McRae's take profit technique where you set an initial limit of the distance form point 2 to point 3 projected from point 2 to target.
Even better is Phil from "trading strategies" site where your target is either stopped out at point 3 ( you do not move your stop) or take limit at distance from point 1 to point 2 projected in to the future from point 2.
Either way both strategies can be used standalone or on the second lot after closing the first with enough profit to pay for a free trade.
Frugi if you have a look at the chart you posted at the top of this page you would have done just as well if you set a stop loss at point 3 a limit at the distance from point 1 to point 2 extended from point 2 upwards. You could have alos walked away from the trade after the setup.
I am yet to see how reliable that is but Phil tells me it is very reliable.

:cheesy:

 

[z482493]

Who is Phil and what is the URL of his site?

Thanks!

 

[ampro]

Who is Phil and what is the URL of his site?

Thanks!

http://www.trading-strategies.info/

 

[z482493]

Hi ampro,

Thank you for the link.

 

[Christrader]

Tremendous thread! Thanks. I've got other Ross books and they've been a great help.

As a rookie trader I have a rookie question - If a trader was to trade only the ross hook what do you think you're percentage of success would be?

Christrader

 

[commander-keen]

Ross Hooks

I spoke to Joe Ross about this and he said many folks are making money just doing the hooks. From what I know the best ones are the first one after a breakout. From my experience if you are trading forex spot and using TTE you need at least an hourly chart to make some profit BEFORE the breakout of the hook.

 

[Christrader]

Thanks Commanderkeen!

Is anyone doing only RH's on Futures and Mini Indexes?

Is anyone willing to share success percentages?

I read earlier somewhere that someone was having around a 70% success rate. Does that ring true or is that a little high?

Thanks!
Christrader

 

[Joe Ross]

To Christrader

Tremendous thread! Thanks. I've got other Ross books and they've been a great help.

As a rookie trader I have a rookie question - If a trader was to trade only the ross hook what do you think you're percentage of success would be?

Christrader

-------------------------------------

Dear Christrader:

If you use the Traders Trick Entry ahead of the Ross Hook you can expect to win 65% of the time. With proper trade management you can do even better. With improper trade management you will surely do worse."

All the best,

JR

 

[Christrader]

Thanks Joe.

Everybody,

I have to honestly express something. I'm new to this game, but not to hardnosed business and heavy negotiations. Since I've been involved in researching and educating myself in the markets I've yet to come across a soul like Joe Ross. He's sincere, humble and God has truly touched his life with the blessing of helping others. Many other market instructors (I've talked to most of them) are good in their own right but you can't beat Joe for sincerity, genuine helpfulness and patience with new guys like myself.

If you're looking for the real thing - Joe's as real as it gets.

God Bless him.

Thanks,
Christrader

PS Be sure to check out his website - http://www.tradingeducators.com

 

[commander-keen]

OK I have been trading the 1-2-3 formations for a while. Not using the traders trick because on 30 min forex spot charts (sometimes 15 mins) it doesn't seem work. What I would like to know is if anyone has a filter for filtering out bad 1-2-3 formations or a way of trading only the best?
Interested in what someone said about counting number of bars in EACH LEG OF THE 1-2-3.
Anyway interested to hear any info that would help to avoid the 1-2-3's that fail. :cheesy:

 

[charliechan]

OK I have been trading the 1-2-3 formations for a while. Not using the traders trick because on 30 min forex spot charts (sometimes 15 mins) it doesn't seem work. What I would like to know is if anyone has a filter for filtering out bad 1-2-3 formations or a way of trading only the best?
Interested in what someone said about counting number of bars in EACH LEG OF THE 1-2-3.
Anyway interested to hear any info that would help to avoid the 1-2-3's that fail. :cheesy:

try changing time frames.

find a time frame where the formation looks as clear as possible, rather than some messy congestion.

eg a 10m may look a bit dodgy, but when looked on a 30 min, it may look a lot neater - so you should trade the 30m - assuming you have the money/risk to do so properly. otherwise, pass it up and wait for one where you can.

what i say is true for all visual based chart patterns/decisions.

 

[commander-keen]

try changing time frames.

find a time frame where the formation looks as clear as possible, rather than some messy congestion.

eg a 10m may look a bit dodgy, but when looked on a 30 min, it may look a lot neater - so you should trade the 30m - assuming you have the money/risk to do so properly. otherwise, pass it up and wait for one where you can.

what i say is true for all visual based chart patterns/decisions.

So Charlie are you simply sugesting to use a larger time frame in general or to use the larger time frame to confirm an emerging pattern in a smaller time frame?

 

[charliechan]

take your signal from the larger time frame, manage on the smaller.

 

[commander-keen]

Thanks Charlie. Do you have any other tips for finding the good one Also does anyone have anything they have noticed that makes a good pattern stick out from a bad one. I have noticed that those 1-2-3 patterns that occur after a rally are more likely to work than those that come out of a trend that stair steps or looks cluttered? I also find that Phils target is remarkably accurate a lot of the time. That target being the length of the number 2.
Has anyone found that a number of bars or any other "pattern" can help to trade only good setups?