Forex 1-2-3 Method

Posted on by The INO.com Team
Let's face it... Forex is a market that has HUGE potential, HUGE liquidity, and little good information out there on how to trade it with success. That's why I've asked Mark McRae from Forex Avenger to come and teach us a bit about a 1-2-3 Method that his partner David Curran from Forex Avenger has had major success with. Please take time, read the blog entry, and visit Forex Avenger to see the success they have experienced trading forex!

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This particular technique has been around for a long time and I first saw it used in the futures market. Since then I have seen traders using it on just about every market and when applied well, can give amazingly accurate entry levels.

Lets first start with the basic concept. During the course of any trend, either up or down, the market will form little peaks and valleys. see the chart below:

The problem is, how do you know when to enter the market and where do you get out. This is where the 1-2-3 method comes in. First let's look at a typical 1-2-3 set up:


Nice and simple, but it still doesn't tell us if we should take the trade. For this we add an indictor. You could use just about any indicator with this method, but my preferred indicator is MACD with the standard settings of 12,26,9. With the indicator added, it now looks like this:

Now here is where it gets interesting. The rules for the trade are as follows:

Uptrend

  1. This works best as a reversal pattern, so identify a previous downtrend.
  2. Wait for the MACD to signal a buy and for the 1-2-3 set up tobe in place.
  3. As the market pulls back to point 3, the MACD should remain inbuy mode or just slightly dip into sell.
  4. Place a buy entry order 1 pip above point 2
  5. Place a stop loss order 1 pip below point 3
  6. Measure the distance between point 2 and 3 and project thatforward for your exit.
  7. Point 3, should not be lower than point 1

The reverse is true for short trades. As the market progresses you can trail your stop to 1 pip below the most recent low (Valley in an uptrend). You can also use a break in a trend line as an exit.

Some examples:



There are a lot of variations on the 1-2-3 setup but the basic concept is always the same. Try experimenting with it on your favorite time frame.

Good Trading

Best Regards
Mark McRae Forex Avenger

Bio - Mark McRae is a fulltime professional trader, author and coach. He has coached some of the top names in Forex trading. David Curran, Forex's latest rising star attributes his success in the Forex market to the teachings of Mark McRae. To read more about David, go HERE

10 thoughts on “Forex 1-2-3 Method”

  1. Forex Market and trading trend for a beginner the world of forex trading as to be studied most people can get easy deceive by certain automated software or using Forex technical software on the long run sometime their make good profit or sometime end up losing their money.

  2. 1-2-3 bottoms and tops have been around for a long, long, long time.

    chart pattern trading has been around for 100 years or so and was the "De rigeur" till the 1929 crash for most retail investors along with GAnn.

    NObody bothered with 'Fundamental Analysis" or should I say "Funny Mentals".

    But then came along the "Whore Society" better known as Wall street bankers in the early 1960's and they had no thing to hang on...all with the top in 1966 till 1982....but in the early 80's with all MBA's and especially since 1994 "Fundamental analysis" was it.

    Pity nobody realized it was a parabolic curve....and that spells disaster.

    Greenspan...that crook...bailed out his buddies and we got the shaft in 2007 start to ow 2009.

    if you are a SUCKER THEN BUY AND HOLD.

    But I'm shorting this thing all the way down to ES=450, YM = 4200. and then again in till the the cash Dow or YM equates to AN OUNCE OF GOLD

    LIKE IN 1982...THE DOW AND GOLD WERE THE SAME.

    Its coming back you FOOLS. Ooops. I'm just a Carpenter...never been to those prestigious Business Schools or worked on Wall Street.

    WHAT DO I KNOW !!!

    Mark is all right.

    You don't need anybody....but the ??? rule. above this is long, below this is short. just look for a chart pattern.

    I really should be in the seminar, webinar etc business....but what I know....will cost $$$$$$$$$$$$$ and I want to give all my money to the poor.....once I become so rich...YO would not believe.

    Yes..."Angels all around us."

    Finally, financially...remember this..."NOBODY KNOWS WHAT YOU THINK THEY DO."

    NOT EVEN Mark !!!

  4. Mark,almost always over delivers on his offers. He is kind of like EF Hutton. I have bought some of his stuff and have it in my reference library. All is not for me, but he always over delivers...

    Thanks Mark.

  5. Hey vito & AJ

    Thanks for that, Makes me think I should have taken
    part before.

    AJ drop me a line at support @ oldtreepublishing.com
    with the link you are using. I have a few videos on
    Fibs, so I am not sure which one it is. Once I have
    that I will go check it out and I will make sure you
    get to see that vid.

    Mark

  6. amazing, i've been practicing ur lesson. its works. great man. but i cant watch ur video fibo lesson. i've been trying to follow ur instruction but still black screen. thanks a lot mark. i really appreciated ur very valuable lesson.

  7. Many compliments. It's hard to find someone explaining so clearly. Thanks a lot
    vito saponaro

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