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123 Profitable Crude Oil trading


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123 Profitable Crude Oil trading

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  #1 (permalink)
El Salvador/Israel
 
Experience: Intermediate
Platform: Ninjatrader 7
Broker: GlobalFutures/AMPClearing
Trading: CL, GC, TF
 
JDNeeman's Avatar
 
Posts: 522 since Apr 2012

I wanted to share with you this strategy that is well known for some traders, but i have made my own contributions to it, and i hope help some with this. The strategy is based on the 1 2 3 method.

Best Regards.

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  #3 (permalink)
El Salvador/Israel
 
Experience: Intermediate
Platform: Ninjatrader 7
Broker: GlobalFutures/AMPClearing
Trading: CL, GC, TF
 
JDNeeman's Avatar
 
Posts: 522 since Apr 2012


Hello all,

I decided to write a new thread on this strategy alone, and separate my other thread just to focus on my 123 trading method here.


1. WHAT DO YOU NEED.

Regarding the charts here it is:

- 13 Range Chart (Normally i trade CL so most of my examples will be on CL)

Regarding the indicators

please check image



2. THE STRATEGY

First of all we have to identify the 123 formation on price.

Please check images to see formations




I will begin the strategy with the simple formation of a 123 buy and 123 sell.
later i will add how to filter the trades using DM and Stochastics.

This is it for now.

Will be back with more.

Cheers.

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  #4 (permalink)
El Salvador/Israel
 
Experience: Intermediate
Platform: Ninjatrader 7
Broker: GlobalFutures/AMPClearing
Trading: CL, GC, TF
 
JDNeeman's Avatar
 
Posts: 522 since Apr 2012

The 123 Strategy is one of the simpler and most profitable strategies i have come across, with some additions we arrive to a method to filter out trades and take out the guessing.


First of all, the question go to how i identify the swings high or low? to form the 123 structure, well you can do this by "eye" it only need to comply with the rule that THE 3 LEVEL CANNOT EXCEED THE NUMBER 1 LEVEL,
To make this easier, i use an indicator in NT called Swing with the strength parameter set to 5 , this automatically give me the swings high and low. (see Image 1) ,


SELL STRUCTURE

Since i will be using the swing indicator to identify for me the levels, to sell i want to see two swing highs and one swing low, the swing low has to be in the middle of the two swing highs, (See image 3)
- The distance between the number 2 and number 3 cannot be more than 40 ticks.
- The closer the 2 and 3 the better.
- The price should be below the 18 EMA at the time of the breakout of number 2
- Place a pending order to sell 1 tick below the 2 level price
(The pending order is placed once you have a 3 level confirmed, )

If the down trend is strong the Number 3 has the possibility to turn in a number 1 and begin another assault down forming a new 123 structure.

PROFIT LEVELS

I normally use Fibonacci Extensions to determine my profit levels, (See image to check on settings)
I take number 1 and extend down to number 2 since i will take a trade 1 tick lower the number 2 i place the last leg of FIB one tick below number 2, this gives me my profit targets.

About the Stop you should have a fixed number to loss a day, but every one is free to choose his stop.

NOTE: When you approach a "BURNING LEVEL" as i call them this could be, Prior day High, low, Open, Current Day Open, you should trade with caution.

Later we will see confirmation with DM and Stochastics.

Cheers-

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  #5 (permalink)
the congo
 
Experience: Advanced
Platform: North sea oil rig
Trading: Cl
 
rassi's Avatar
 
Posts: 917 since Jun 2009
Thanks: 1,508 given, 1,160 received

You should look at @Gary's threads, very similar in style although he uses a 6 range.

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  #6 (permalink)
El Salvador/Israel
 
Experience: Intermediate
Platform: Ninjatrader 7
Broker: GlobalFutures/AMPClearing
Trading: CL, GC, TF
 
JDNeeman's Avatar
 
Posts: 522 since Apr 2012

Hello,

I see a possible 123 formation developing in the CL.

letīs see what happens.

Cheers.-

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  #7 (permalink)
Kirkland, WA/United States
 
Experience: Intermediate
Platform: NinjaTrader
Broker: Optimus/Vision/Rithmic
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LightWeight's Avatar
 
Posts: 138 since Jul 2012
Thanks: 138 given, 42 received

Thanks for posting this, I found it interesting. I played around with it on sim today and had some success. Obviously this was all one downtrend in the larger scheme, but using this method and the fib extensions I was able to trade the minor pullbacks.

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  #8 (permalink)
El Salvador/Israel
 
Experience: Intermediate
Platform: Ninjatrader 7
Broker: GlobalFutures/AMPClearing
Trading: CL, GC, TF
 
JDNeeman's Avatar
 
Posts: 522 since Apr 2012


LightWeight View Post
Thanks for posting this, I found it interesting. I played around with it on sim today and had some success. Obviously this was all one downtrend in the larger scheme, but using this method and the fib extensions I was able to trade the minor pullbacks.

Great!!..it is good to know this help some one...hope you become a profitable trader...long journey ahead!!...but rewarding at the end!!!....


CHeers.!!!!

JDN

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