1-2-3 Pattern Day Trading Strategy FREE Download1-2-3 Pattern Day Trading Strategy FREE Download

The 1-2-3 Pattern Strategy is a free downloadable day trading strategy. The 1-2-3 Pattern Day Trader is an effective trend following strategy that is built on the 1-2-3 pattern, daily signal overshoots, and other important indicators that act as filters for identifying trends. Used primarily for Forex day trading, this system identifies pivot lows and highs, allowing traders to establish positions that align with market trends and take advantage of a favorable risk-reward ratio.

Indicators used in day trading strategies

This system uses a variety of indicators including Daily Signal Arrow, Daily Open Line, Daily Signal Overshoot, Daily Bar, Daily Look, Daily Explosion, and 1-2-3 Pattern V6. These indicators work together to help traders identify the correct market direction near support and resistance zones.

These are the main indicators used in this strategy to determine entry. But the system does come with an additional indicator so you can try to filter the signal further.

1-2-3 Pattern V6

The indicator provides blue and orange buy and sell arrows. The signal is an integral part of the strategy as it determines the entry signal. Other indicators for the day trading strategy help filter out the less profitable arrow signals from this indicator.

Day Signal Ultra

Day Signal Ultra acts as a color changing EMA 190. When the price is higher than Day Signal Ultra, the color of the ribbon changes to white. Conversely, the ribbon turns Orange when the price falls below the Day Signal Ultra. The slope of the Daily Signal Ultra is critical for identifying trend strength. When price is above this indicator and the slope is increasing, traders should consider entering a long trade. On the other hand, short trades are recommended when the price is below the daily signal Ultra and the indicator slope decreases.

Day Look

Day Look is another trend following indicator that plots a histogram based on the difference between long-term and short-term moving averages. If the histogram is below the zero line, it indicates a downward trend in prices, while if the histogram is above the zero line, it indicates an upward trend in prices.

Day Explosion

The Day Explosion is essentially a rebranded Waddah Attar Explosion indicator, with an attractive color scheme. It operates on multiple time frames and demonstrates trend strength, explosiveness, or momentum. When the trend is upward, the histogram color changes to white, and when the trend is downward, the bars turn to Orange . The indicator also plots an exploding signal line that acts as a momentum threshold, providing valuable data for any currency pair on all time frames.

This 1-2-3 pattern strategy can provide you with trading signals that you can take as is or add additional chart analysis as recommended to filter the signals further . While the system can be used by traders of all experience levels, it may be helpful to practice trading on an MT4 demo account until you become consistent and confident enough to start using it.

This day trading strategy is completely manual. Indicators will generate signals, but any decision to enter the market and set a protective or profitable exit stop will be up to the trader. Therefore, traders must become familiar with the principles of risk and reward and use initial support and resistance areas to set up entries and exits.

The 1-2-3 pattern trading system can be used on any Forex currency pair and other assets such as stocks, commodities, cryptocurrencies, precious metals, oil, gas, etc. You can also use it within any time frame that works best for you, But it works best on the M5, M15 and M30.

Trading Rules of the 1-2-3 Pattern Strategy

When using this 1-2-3 pattern strategy, remember to tighten your stops around high-impact news releases or avoid trading for at least 15 minutes before or after these events.

As always, to achieve good results, remember proper money management. To become a profitable trader, you must master discipline, emotions, and psychology. Knowing when to trade and when not to trade is crucial. Avoid trading during adverse times and market conditions, such as low trading volume/volatility, outside of main trading hours, exotic currency pairs, wide spreads, etc.

• Only trade in the direction of the trend.
  • Uptrend: Price is above the White Day signal exceedance indicator point.
  • Downtrend: Price is below the Orange daily signal exceedance indicator point.

Buy Entry

• 123 pattern V6 Blue buy arrow.
• Daytime Signal Overshoot Indicator White dot.
• Day look indicator White bar.
• Day explosion White bar above Yellow line.

Sell ​​Entry

• 123 pattern V6 Orange sell arrow.
• Intraday signals exceed indicator Orange dot.
• Day look indicator Orange bar.
• Day explosion Orange bar above Yellow line.

Trade Exist

Any position using this day trading strategy can be liquidated using a fixed profit target. Alternatively, profit targets should be set using previous support, resistance, or highs and lows as reference points . You may also exit the trade manually if system conditions reverse .

• Initial stop loss 5-10 pips above/below the signal bar depending on the time frame.
• The profit target is 7-12 points for M5, 8-15 points for M15, and 15-25 points for M30.

It is recommended to use stop loss . Set your stop loss below the entry price using previous support/resistance as reference points or previous high/low swings. The use of fixed stop loss settings without any reference point is not recommended.

• Learn More 123 Pattern Finder Forex Indicators Free Download

Conclusion

In summary, the 1-2-3 pattern strategy provides traders with a powerful system for aligning their trades with market trends. Its effective use of a range of indicators helps traders pinpoint entry points, making it an attractive option for Forex day traders. Additionally, this day trading strategy comes with additional indicators that allow further experimentation and refinement of signal filtering.