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Hi jdella, good questions. You are correct I in essence trade breakouts of previous highs/lows. My stops are set at the previous fractal high/low and I adjust up my stops as new fractals develop. I don't have a profit target on my range breakout trades and fractal reversals. On my 1-2-3 setups I target 21 ticks or more depending on the strength of the move but I don't pursue runners on the 1-2-3 setups. Reason being the first wave gobbles up a substantial part of the move and you may be pushing your luck trying to get a runner out of it. I also never have a stop that is larger than my profit target on my 1-2-3 setups. On the range breakout trades and fractal reversals I shoot for a runner and simply adjust my stops on the way down. Scenario number 1 on the attached pic is in essence how I pull my profits on the runners. Disregard the entries as that diagram is more specific to exitting a failed trade. However, the exit concept is the same. If my runner tags a high or low retraces and then retests that high/low and demonstrates serious hesitation then I'll exit.
Blz
P.S. My trade today was a perfect example of why you take profits on a 1-2-3 setup versus targeting a runner. I was up 25 ticks and ended up breaking even as the trade reversed. I was a bit too tired and forgot I was playing a 1-2-3.
Can you help answer these questions from other members on NexusFi?
I wanted to make some visual changes and also make the strength of the high/low period adjustable. The original version had a Period fixed at 2, and only drew the first symbol on the chart -- not the subsequent dots.
Uses a series of successive bars and analyzes highs and lows to form areas of support and resistance.
Original credit to Bill Williams. Thanks to Blz17 for giving this to me :) I just made some visual changes and small enhancements.
The fractals indicator …
Blz, thanks for answering my question and please forgive me if this is a totally dumb question, but I'm not clear on what the difference between trading the fractal and trading the 1-2-3. Isn't it the same thing, trading the break of what would actually be point 2 in the 1-2-3 setup?
No problem jdella and there is no such thing as a dumb question. The biggest difference between the 1-2-3 setup versus the fractal reversal is in essence the landscape of the trade. With the 1-2-3 you are looking for pullbacks and breakouts within a primary trend. With the fractal reversal setup you are looking for a topping pattern or bottoming pattern that breaks out/down. With the fractal reversal it's too early to look at the chart and call it a trend so it's a more aggressive trade but it also holds a higher reward potential and thus the reason I play those for a runner.
To be quite honest a lot of it just comes with screen time and practice. I've almost finished reading the entire thread at forexfactory and I think doing that really helped it all sink in (the thread is over 7,000 posts!). I've attached my screenshot from Friday and labeled the one's I consider fractal reversals versus 1-2-3's. Obviously it's easy in hindsight but hopefully it will help you distinguish between the two. Again practice, practice, practice and it starts to sink in.
Got one more 1-2-3 setup, good for 20 ticks. Some might be wondering why I'm not trying to let these run. My plan most of the time (remember there are no set in stone rules) is to take 20 ticks or so on 1-2-3's. My fractal reversals is where I shoot for runners.
Blz
UPDATE: Perfect example of why I don't try to run my 1-2-3's. Because the 1-2-3 has already had a significant move down you are pushing your luck for more continuation. This very trade appears to now have bottomed and is moving higher. If it does indeed move higher then my exit was 5 ticks from the bottom.
For my style of trading today was a very boring day. I only took two trades all day and broke even on them both. There was one great setup today but I was in the restroom. That's twice in 1 week that's happened to me. New trading rule for me, no bathroom breaks. Here Mike, I'll save you the trouble of posting this .
Anyone interested in trading this style is highly encouraged to read my previous post. It hits on how to manage a tough trade with this style and shows a trade I took today where I got out break even. Despite my lack of profit (or loss for that matter) today I think I traded quite well as I managed my two trades accordingly and didn't try to force trades.
I will be watching the Japan open as you can frequently catch a single move off the open but gotta be careful as the spreads can get a little wide.
Blz
P.S. There were some great trades on the European session. If I find consistency in my trading and go 100% full time then I'll probably begin trading the European session but it's tough right now being in Seattle and having other priorities.
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