The strategy is called 1-2-3 because it uses the three points chart pattern. First we need point 1 which needs to be the highest tip on the chart. You enter the trade when the support or in other case resistance which is formed by point 2 is broken. Have in mind that you do not have a valid 1-2-3 formation if the 3rd point is lower than point 1 or the 3rd point is higher than point 1. So at any time when the 1st point is surpassed by 3rd point in the opposite direction you can not apply the strategy. Please have a look at the expample how it works:

You have to be sure that you do not enter such trades randomly and anticipate what is going to happen because going against the trend is risky. That is why it is important to remember the latest rules that were mentioned. If we go through it again quickly nothing must pass point 1. If the price is going to pass point 1 then do not trade because it is too risky. 

The strategy is used for many years now in Forex and stock trading, too. Now let us have a look at a second example. You can see that all highs and lows are numbered. These are opportunities which would be successful in this case. In this example you are opening a trade when the 2nd point is broken.

As you can see from the picture you only trade when point 2 is surpassed and not before. The same thing can be applied to uptrend just all is reversed. Just have patience to wait for the pattern to take a trade. 

Strategy Tips

This strategy is simple and has a good earnings ratio if it is used correctly. Please take some time to practice it on a demo account like every other strategy before going live.