Welcome! The 123 Trading Method is a technical analysis trading strategy that is based on price action patterns. The strategy is often used in Forex, Futures, and Stock trading and can be applied to any time frame.
The basic principle of the 123 Trading Method is to identify price patterns on the chart that indicate a potential trend reversal. The pattern consists of three price movements, where the first movement is a strong move in one direction, followed by a retracement, and then a final move in the opposite direction of the first move.
To apply the 123 Trading Method, traders will typically look for the following:
- The first move: The first move should be a strong move in one direction, indicating a clear trend.
- The retracement: After the first move, there should be a retracement that is not too deep, indicating a pause in the trend.
- The second move: After the retracement, the price should move in the opposite direction of the first move, indicating a potential trend reversal.
Traders will typically enter a trade when the price breaks out of the retracement level and moves in the direction of the second move. The stop loss is typically placed below the low of the retracement, and the profit target is set based on the distance between the high of the first move and the low of the retracement.
It’s important to note that the 123 Trading Method is a subjective strategy that relies on the trader’s interpretation of price action patterns. As with any trading strategy, proper risk management and a solid understanding of market conditions are essential for success.