The Patterns Of 123 MW

I called it 123 MW  because the 123 patterns shaped like an ‘M’ or ‘W’, and this chart pattern is the core of this system/strategy. In fact, not only in forex charts but you can find it in stocks, commodities and other financial assets.

These chart patterns are very easy to find and you can find them all over the place at all time frame. I even suspect that this pattern is “the core” of many other chart patterns found by the experts.

It’s really great …

123 MW Chart Patterns
123 MW Chart Patterns

The Rules of 123 MW Forex System

I’d like to show you some of the rules. They are divided into 4 parts which are :

  1. Time Frames And Money Management
  2. Entry Rules
  3. Stop Loss Rules
  4. Profit Target Rules

123 MW Forex System – Time Frames And Money Management:

You can apply this system on any time frames on the practice. Just want to let you know and maybe bit to remind you, on a smaller time frame the price action will be much more choppy and you’ll feel much more rush. Smaller time frame are more aggressive style.

However, on a bigger time frame you’ll feel more relax, but you’ll have a bigger stop-loss and a bigger take profit point. I recommend you not to risk more than 2% of your trading account per one trade. But that depends on how much money on your account, sometime I risk 2% sometime 5%. It’s all depends on the situation at that time. When you have 1 million dollars on your forex account then there’s no reason to put more than 2% risk per trade :-D .

123 MW Forex System – Entry, Stop Loss and Take Profit Rules

It’s a simple forex trading system, but it is highly profitable and the best part is I give it to you free. If you see the picture above, the entry signal is at the break of the number 2 point and the stop-loss is slightly below/above the number 3 point, it’s easy right?? What about the profit target (TP) point? Well, there are several options to put your profit point.

Some “gurus” teach people to put the target profit with a Fibonacci calculation. Well… this time I will make it easier for you. Calculate/count the range between point 2 to point 3, if the range is 50 pips then your target profit is also 50 pips, that is option number one. The second profit target option is by multiplying your target profit point to 1.5(one and a half) times of your stop-loss. And the third/last option is to let it go and wait until the chart show us an ending/weakening/reversal pattern. This picture below described the forex trading system.

123 Forex Trading System
123 Forex Trading System

The above example is euro/usd on 30 minutes chart. Number 1 is the low point, Number 2 is the high point and  Number  3 is the higher low. The price penetrated the number 2 point, it means that the down trend is over and ready to move back up. You can put your long trade with a buy stop order slightly on the above of the number 2 point.

For 30 minute charts and it’s on euro/usd  5 pips above the number 2 point is okay. And then we calculate/count the range between number 1 to number 2 (it’s 70 pips) and from number 2 to number 3 (it’s 55 pips). You may put 70 pips and 55 pips as a reasonable target profit, and your stop-loss below the number 3. Again, You can see from the picture above that the price action move up about 92 pips. Yes it went down but it never touched your stop-loss.

By the way the gold-colored zigzag lines is zigzag fractals indicator and the blue and red dots are fractals. With these two forex indicators it will make you easier to recognize the price action.

Wait a minute…,  have I missed something here??? Yes… the down trend is also making 123 pattern. Here we go….

The Best Forex Trading System
The Best Forex Trading System

The above example is euro/usd 30 minutes chart on may 20th, 2011. Go on open your forex trading platform and check them out. The 123 patterns did not happen after bullish or bearish trend only, it also occurs after neutral/flat/sideways trend.

123 MW Forex System is The Best Forex System/Method

After years of my experience, I considered 123 MW forex trading system as the best forex system/method because of several reasons :

  1. 123 MW forex system is easy to use.
  2. 123 MW forex system has a great profit and loss ratio.
  3. 123 MW forex system can be applied on any pair.
  4. 123 MW forex system can be applied on any time frames.
  5. 123 MW forex system can be developed into your own forex trading system and style. (some people even use this pattern as a scalp breakout forex trading system too).
  6. 123 MW forex system is immortal. I don’t know who was the first discover it, but i know this pattern has been used by professional traders since the beginning of the stock exchange as the basis of technical analysis to predict the end of a trend. Even somebody made an e-book and sell it on the net :-D

Developing Your skill

To develop this trading system to become a perfect forex trading system i really recommend you to read my earlier post on various chart patterns such as flag and pennanttriangles,double top and double bottomhead and shouldersbroadening top and finally the most important one is how to define the trend.

If you read the posts and watch the chart patterns you will always see the 123 chart patterns on them. I will give you more trading setup examples of this 123 MW forex trading system on the next post.

Update: You can have the 123 MW forex system’s indicator and template for MT4 here, any questions? :-)