123 Pattern Day Trader: Breakout Strategy for Forex Intraday Trading

The strategy 123 Pattern Day Trader is a profitable Forex breakout system based on Price Action 1-2-3 chart pattern and trend filtering.

Strategy parameters

Currency pairs: major pair with low spreads
Timeframe: M5 – M30
Trading time: any, do not trade during big news
Risk management: choose a lot size that the risk is no more than 2-5% of the deposit per trade

Indicators used

Day signal arrow
Day open line
Day signal ultra filter trend
Day bar (ADX 14 period and Parabolic SAR 0.2 -0.02)
Day look (12, 26, 9)
Day explosion multi-timeframe
123 pattern V6

Setting up a price chart

Unpack the zip archive
Copy the template to the templates folder
Copy the indicators to the MQL4 folder -> Indicators
Restart the terminal
Open the chart of the required currency pair
Install a template named “123 Day Trader.tpl”

The correct price chart with a template should look like this:

General rules of 123 Pattern Day Trader strategy

You need to enter the market only in the direction of the current trend:

Uptrend: the price is above the white dots of the Day signal ultra indicator
Downtrend: the price is below the red dots of the Day signal ultra indicator

Signals indicating the opening of a BUY position

123 pattern V6 indicator drew up arrow
White dots on the Day signal ultra indicator
The Day look indicator shows a white bar
On the Day explosion indicator, the white bar is above the moving average

123 Pattern Day Trader strategy BUY example

Signals indicating the opening of a SELL position

123 pattern V6 indicator drew down arrow
Red dots on the Day signal ultra indicator
The Day look indicator shows a red bar
On the Day explosion indicator, the red bar is above the moving average

123 Pattern Day Trader strategy SELL example

Placing stop loss and take profit orders

A stop loss order is placed 5-10 points above / below the signal bar;

Take profit order is set depending on the used currency pair and timeframe. The recommended values are M5: 7-12 points, M15: 8-15 points, M30: 15-25 points.

Please note that the sizes of stop loss and take profit orders are indicative and may vary depending on the currency pair and timeframe. You may also use a trailing stop, but in this case, the profitability of the strategy may decrease.

Forex strategy 123 Pattern Day Trader has simple trading rules, so it should not be difficult even for beginner traders.

I would recommend not opening positions before, during and after the release of important macroeconomic news. Please also test the strategy on a demo account before using it on a real account.

In 123-pattern-day-trader.zip file you will find: