GBP/USD 123's

[Pipmaster1]

A 20 min 123 is trying to set up. I'd rather that gap not be there, but I'll keep my eye on it. This would be a long 123, which may be signaling price trying to break the #2 point on the daily chart. :whistling

 

[Pipmaster1]

Daily 123 broke the #2 point...finally.

 

[Pipmaster1]

Here is what is forming up at the moment. A 30 min and a 20 min 123. Looking to short at the #3 if everything lines up. Since the Daily chart broke the #2 and a retrace is what we expect then shorting her on the 30 min or the 20 min could work out perfect. The next step would be to watch price as it moved to the Daily 61.8% or 76.4% retracement for a possible buy on the Daily 123.

 

[Pipmaster1]

I just sat down, so not really in the zone. This formation looks pretty good, howwever the RSI's are not as extreme as I'd like on the 30 min chart and its going against the daily 123. So it was not enough for me to take this short 20 min 123. But it could really go either way.

 

[matrader]

Hi Pipmaster.
Good to see you are still posting & doing well.
One question....do you have a timeframe for the 123 to form?
I can often see them forming much earlier....but they are not always reliable.
Is there an optimum number of bars / candlesticks you have found to be most reliable?
Keep up the good work & good luck!
Matt

 

[Pipmaster1]

Hello Matt,
Look at that 20 min 123 actually did follow through worked out perfectly. :clap:

To answer your question I'll have to give away my secret, which i don't mind doing...lol.
I have a filter that decides whether or not the #2 point is valid. That blue line on my charts is a 40-EMA. price has to meet that EMA line and turn around. I like price to go right to it, but sometimes it goes through it just a little like this 20 min did. I do NOT want price to close over it. Also the MACD you see at the bottom needs to cross in the middle of the #1 and #2 like it did on the 20 min chart. Now here is what is so cool about this method. You can change your time frame to get the 40 EMA to "look" right. So I usually start on the 30 min chart and see where things are at. I then go up or down to find the right time frame. For example that 20 minute looked good, but it didn't look near that good on the 30 min chart.

I don't usually go much smaller than 20 min or maybe 15, kinda depends. But I go 30 min, 60 min, 2hr, 3hr, 4hr, 6hr, 8 hr, 12hr, and sometimes like now there is a Daily that forms up. I hope this answers your question about what I use to determined if it is a 123 or not. So to recap, #2 needs to bounce of 40 EMA and the MACD needs to cross between the #1 & #2. Those are first two things I look for. Good luck!

Ryan

 

[matrader]

Cheers Ryan - thanks for the insight.
Looks good & makes my methods look too simplistic - no doubt the reason for too many false set ups.

 

[matrader]

did you trade this today - if so where did you place your order ?
On the break of the #2 point or at the red arrow?
if at the red arrow - why?
Matt

 

[justtradin]

My last strategy was to go long the USD in the 0.76-0.74 zone.

Time to go long euro 1.2259 stop and long term I see the GBP/USD at 1.25.

 

[Pipmaster1]

No I did not take this trade, as I said the Daily 123 looked so good and was giving a long bias I decided to not trade the 20 min. Even though the 20 min by it self looked good. Also the 30 min chart with RSI 14 and RSI 3 was not extreme enough @ the red arrow to convince me to take the short trade. So the general rule is the bigger the time frame the more power the formation has, this doesn't always work, but you can see why I didn't short a potential 20 min 123 when there was a long 123 on the Daily chart that has been set because its already broke the #2 point.

The red arrow would have been the place to enter, at the #3 point. I have two places that I can enter this formation. First I need to clarify that a 123 is not set in stone until a #3 is made and price BREAKS the #2 point. Then it is a true 1-2-3 formation. I would then look to get in after the break of the #2 and a retrace back towards the #3 point, preferably a 76.4% retrace. This would be a textbook 1-2-3 set-up and entry.

However after watching and studying this formation for over a year there were many set ups that never retraced after the #2 was broke, I so added another entry point at the potential #3 point with my stop just above/below the #1. If I do get in @ the #3 point i have a 2 limit system that I use to help ensure the most profitable scenario, the first limit is just on my side of the #2, just in case it don't break the #2 point and turns against me. The first limit usually buys my trade. If the formation ends up holding together and breaks the #2 and then retraces then I can get in again since the first limit removed all my risk. This entry is usually a price action entry and has a very small stop and has only one limit which is the same as Limit #2 of the first trade, which is just on my side of the 200% line.

This may sound complicated but its really not. You can go through some of my pictures and see where the #2 and where my limits are and it should make sense. I hope this helped.

Ryan

 

[4xpipcounter]

Pipmaster, I like your thread, mainly because of the transparency. Is your 123 system a system that has been developed by you? Do you only trade cable or are there other pairs you trade?

Thanks. I enjoy how simple this system is. Money management is so important, feels like everything is in place. Just need to take the opportunities when the market gives them and the numbers will take care of themselves!

 

[pssonice]

4xpipcounter I dont like your thread, mainly because of the intransparency

no just-in-time delivery

 

[Pipmaster1]

4xpipcounter,
Thanks for the compliments, I actually strive for the transparency. It is the only thing that makes us credible in this business I think. My real time pictures is one of the surest ways to have that transparency.

As to your question, no I did not develop this system, at least not from the ground up. I did add my own thinking to it. I don't know of anyone that trades this system/formation quite like do though. A 1-2-3 formation is a pretty old and well know formation, however the added filters that are used in the way I have described above were taught to me by the Forex School I went to for a couple years. I learned this formation and also learned and traded price action in the GU and the GY (GBP/JPY) pairs. This 1-2-3 formation and its method fits me the best, its gives me the direction of price and from there I can used price action entry skills to get in with the smallest stop possible. The GU is the only pair I trade 123's in. It does work for the most part in the EU (EUR/USD) pair but does not net as many pips as the GU. And the 1-2-3 simply did not work in the GY, at least not for me.

What styles or methods do you guys trade with? Always like to see what others are doing!
Ryan

 

[matrader]

4xpipcounter,
Thanks for the compliments, I actually strive for the transparency. It is the only thing that makes us credible in this business I think. My real time pictures is one of the surest ways to have that transparency.

As to your question, no I did not develop this system, at least not from the ground up. I did add my own thinking to it. I don't know of anyone that trades this system/formation quite like do though. A 1-2-3 formation is a pretty old and well know formation, however the added filters that are used in the way I have described above were taught to me by the Forex School I went to for a couple years. I learned this formation and also learned and traded price action in the GU and the GY (GBP/JPY) pairs. This 1-2-3 formation and its method fits me the best, its gives me the direction of price and from there I can used price action entry skills to get in with the smallest stop possible. The GU is the only pair I trade 123's in. It does work for the most part in the EU (EUR/USD) pair but does not net as many pips as the GU. And the 1-2-3 simply did not work in the GY, at least not for me.

What styles or methods do you guys trade with? Always like to see what others are doing!
Ryan

I trade 123 s also they work in most markets I have found...but I am trying to concentrate on forex for now.
Your earlier reply was very interesting re the pull back of the break of the number 2 point....I have decided quite recently,through trial & error / studying the markets, to only trade when this happens & to hold fire if not.
It is working for me.
There are many ways & instruments to trade & use and for every reason to buy ..someone can give an equally good reason to buy.
Which can be disruptive to both thought patterns & confidence.
I have learned to have a plan & stick to it and to keep it simple.
I started off looking at 123 formations & channels etc and have since got sucked into all kinds of systems but have ended up back where I started & am having some success now.
Onwards & upwards ....with a bit of luck !
Matt

 

[matrader]

lol...* should read - for every good reason to buy someone can give an equally good reason to sell.

In fact today someone posted a trade to go long a particular market...but to me it was a sure fire sell (good 123 top formation).
The sell would have worked out.

 

[Pipmaster1]

I have learned to have a plan & stick to it and to keep it simple.

Glad to hear it, you have the sound of a seasoned trader! Your quote above may just be the foundation to any lasting success any trader finds in the market place. At least that is what I've learned along my own journey. I also can relate to being distracted and end up doing different things only to wind back very close to where I started. Just that lesson took about 3 years to learn. But like you said, onwards and upwards!

 

[4xpipcounter]

Ryan, I'm sure that even though you have your uniqueness in using the system that you have done very well.
I trade by myself. I have a developed methodology that has proven very well for me. I use the stochastics as a momentum indicator, also the 200 MA, ichimoku cloud, and a proprietary set of S&R's.
I post some of my trades on a thread called "Some of my trades and forecasts". I have a blog where I did a little tutorial session for the followers of my blog. My methodology has proven successful in any market, but the only markets I have any real interest in trading is forex.
Check my thread out if you'd like, and feel free to comment for or against what you think concerning the posts.

4xpipcounter,
Thanks for the compliments, I actually strive for the transparency. It is the only thing that makes us credible in this business I think. My real time pictures is one of the surest ways to have that transparency.

As to your question, no I did not develop this system, at least not from the ground up. I did add my own thinking to it. I don't know of anyone that trades this system/formation quite like do though. A 1-2-3 formation is a pretty old and well know formation, however the added filters that are used in the way I have described above were taught to me by the Forex School I went to for a couple years. I learned this formation and also learned and traded price action in the GU and the GY (GBP/JPY) pairs. This 1-2-3 formation and its method fits me the best, its gives me the direction of price and from there I can used price action entry skills to get in with the smallest stop possible. The GU is the only pair I trade 123's in. It does work for the most part in the EU (EUR/USD) pair but does not net as many pips as the GU. And the 1-2-3 simply did not work in the GY, at least not for me.

What styles or methods do you guys trade with? Always like to see what others are doing!
Ryan

 

[matrader]

Hey ...I just noticed you became a senior member...well done.
Is that because you have more than 100 posts?

 

[matrader]

I might just kepp posting any old tat till I get senior satus...

 

[matrader]

then again