1-2-3 pattern strategy

Friday, November 15, 20130 comments

The 1-2-3 pattern strategy works by identifying areas of support and resistance that are formed as the market is trending and trades are entered on the break of these support or resistance levels.

Timeframes: 1hr and above

Indicators: 123 Patterns

Currency Pairs: Any


Short Entry Rules:

(a) Wait for new blue-orange lines to appear on your chart.
(b) Place a SELL STOP order 1-5 pips below orange line
(c) Place stop loss 1-5 pips above blue line
(d) Your profit target should be placed at 3 times the stop loss distance


Example


Long Entry Rules:

(a) Wait for new blue-orange lines to appear on your chart.
(b) Place a BUY STOP order 1-5 pips above blue line.
(c) Place stop loss 1-5 pips below orange line.
(d) Profit Target= 3 times the stop loss distance

Example


How To Manage Your Trades

The following are a few techniques on how you can manage your trades that are in profit:

If your trade is in profit by amount risked you may consider moving your stop loss to break-even

If your trade is in profit by more than 2 times the amount risked, move your stop loss to lock in profit equal to the amount risked initially.

If your trade is in profit by the amount risked, you may consider closing half of your trading position and move stop loss to break-even so whatever happens, at least you got some profits out…and leave the rest of the position to run to see if it hits your take profit target.

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