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What’s going on guys? So, today I’m going to talk about the three bar reversal. This is the video that you guys have been waiting for. I get so many questions about this. I’m going to go through it. Before I even get into this, we stream live every day 10:30 till noon. 2:00 p.m. to 4:30. If you have questions about this, uh subscribe, join the uh live stream. Also, we have a link in the description of this video to our free Discord.
Go in there and ask. Um but yeah, I’m going to get into this and explain what it is, why I like it, and explain when I take it, when I don’t, my stop losses, and everything in between. To me, this might be the very best TradingView indicator that there is, and I’m going to show you why. So, there’s also rules that go along with it. So, I would make sure to watch through the end of the video so you fully understand
What I’m looking for, how I’m using it, and everything in between, because there are ways to not use it where you’re going to lose money. All right. So, first off, this is TradingView, and I split this up in 5-minute, 15, and hourly. I play this setup on any one of the time frames. But you what you got to realize is the bigger the time frame, the bigger the stop loss has to be. So, just a quick example, when you get these,
I have this indicator. This indicator is called Lux Algo three bar reversal pattern. So, the idea is you have two up, and then the next candle comes down below this first candle. Same way on the up, red red and then green goes past the top of that one. Now, this is obviously great. It’s even better if you get a uh you know, more of a equal or whatever. I don’t even I look at that sometimes, but not always. The major factor
That you need to look at when it comes to playing these three bars is something like this is I’m going to go through. So, see how first of all, I do not take it before 9:00 a.m. or 9:30. This is really a New York only setup. I don’t I don’t go after hours. I don’t go pre-market. I don’t play it in I actually have never back tested it in London or Asia. So, if you want to play those times, back test
It. I’m usually sleeping. But, the idea is you want to see a pattern not a pattern. You want to see a trend one way and this happen at the top of the trend. So, argument’s sake, something like this, I’m probably I don’t know if I’m really taking this one because you’re not making a higher high here. You’re basically got a lower high and that’s not what I’m looking for. I’m looking for the breakout. You’re going, you’re going, you’re going and then
You get this. Now, this is a failed one. This happened today. Basically, we came down. We got bought right back up. The confirmation technically is a close below this line. The fact that we didn’t go through and close is not a con is not confirmed. At the same time, sometimes if you wait for the confirmation, this happens. The whole move kind of happens and you missed out. So, you kind of want to this candle this candle just kind of close and
Then you want to kind of watch this next candle. Obviously, you want to see it get below you know, right here. So, basically this gets below you can have one or two stops. You can either have the stop right here where maybe you go below this line and then you give it 10 points stop. So, your stop would probably be right here. So, if you just wick down and trade back up you lost maybe 10 15 points. All right? That, you
Know, what you’re looking for is this candle to close below 432 and then a continuation down. That did not happen, you would have gotten stopped out. And then it brings you here. The trend goes up up up. We happen again. This one actually closes here. And then obviously, it comes back below 518 and then you never go anywhere else. You just kind of drop and obviously, we get a massive massive pay day pay day. Just That’s exactly what you want. Now,
This is a 5-minute chart. This is on the 15. So, if you happen to get in over here like I said, you could get your stop close. I personally want the stop to be at the top. So, 554 would be mine. My stop would have been up here. Actually, I did. I got stopped out of this one. I got in somewhere around, I don’t know, 440. My stop was a 25-point stop. I got stopped out. I got in this, I got
Way more than 25 points. That was awesome. Now, what even made this even better was you had a three bar on the 15 and the five. So, if you’re kind of getting one here, it’s kind of confirmation. This is the first place you would see it, obviously, cuz this all happens within these candles right here. And then this even shows you more, kind of like confirmation. But, I would probably I have played these larger ones. The problem with these larger ones,
They do hit, and they hit hard. The problem is like something like this, 40 457, you would have gotten a lot of points. I mean, you would have gotten like 90 points, but your stop loss is 100 points to the upside. So, you got to be willing to risk 100 points. I don’t know if I’m willing to risk 100 points. I play minis a lot. So, that would pretty much be my whole account. Yo, maybe I take something like this with
A couple micros, and if we get below this wick, I probably move my stop to break even, and then I move it down. Because no way do I really want to let it go 100 points. So, if I can make something to the downside on this pattern, I would. But, the fact that it happened right here, I’m playing on the five. The same thing goes for the hourly. I wouldn’t have This has happened in the middle of the night. I’m just
Using this as an example. But, like the hourly could be massive. It doesn’t look massive, but 390, I mean, that’s another 100-point stop. So, let’s go back and show some other examples of things I wouldn’t take. So, I would not take Forget about the time. I wouldn’t take it anyways, but the fact that you’re already trending down, I wouldn’t take these. And then you have the same thing to the upside. The fact that we’ve we trended up up up and we
Only came down a little bit, I’m not taking this one. You know, something like this. Actually, this was the other day. This was great. You would have caught the top here down to another three-bar reversal up. Right here, your stop would have been at this wick. This would have been a bumpy ride because obviously you would have sat in this for, I don’t know, 15 minutes and then finally it breaks up. Um This isn’t an A+ three-bar. The reason it’s not
An A+ three-bar is you’ve gone up, you had a three-bar. This is an A+ three-bar. We travel all of this way and get this, I’m hammering this one. Not only am I hammering this one, but the stop is not too bad. And that’s exactly what I want. And then sure enough, it let loose. You got a three-bar, I would have been out of this. I would have You could have taken this three-bar up. And I think as an example, just as
Another example, I’m not taking this one cuz you’re already going down. When we’re already going down, I’m only looking for a three-bar to go up. This is a three-bar to the upside. You would have caught mass Look, here’s a three-bar to the upside. Great, I’m in. My stop, we go up, three-bar down, my stop, I’m in here and we get it again. I’m not looking to take this because obviously you already, you know, you already took this, you’re probably out and
You’re already down so much. So, this happened on Wednesday. The reason I I didn’t take this, even though we were trending up, is because if you look at the candles prior, we’re getting all these wicks with news, the opening, and things like that. I I don’t take it when the market’s doing this, I’m not going to take the three-bar. I just kind of sit it out, and I just kind of wait. Prime example of a uh bullish three-bar that I don’t
Take. We’re going up, up, up. Slight dip, we get a three-bar. This has no meaning to me because it happened on an uptrend. This one Well, this is after hours, but this would be great. Trend up, trend up, three-bar at the top, and then you take it on the way down. So, this is definitely something that I’ve been taking. The moves are not just 10 points. If you look, obviously, you know, going up, three-bar, this is a I don’t know, 80-point
Move to the downside. I’m usually looking for 30-plus points, at least. Close to 50 points. Basically, you’re done with your account for the day if you hit one of these three-bars. Um you know, just that’s the time of the day. Has to happen at the bottom or the top of a trend. And you know, the prior candles can’t be wiki. So, basically, like I don’t know if I’m taking one at like 9:35 or 9:40. You know, I kind of want the
Market to open a little bit. We get a trend, maybe for 30 minutes, and then we reverse. Um but it has to be at the top or the bottom. Uh I’m just looking to see real quick if I see any like that. Oh, yeah, here was Here was a prime example. So, the market opened 9:30. This is the 9:30 candle. And then we got the three-bar at the top like right away. I missed out on this, but the reason why I
Would have taken it is the candles prior were not wiki. It wasn’t up down up down. You got a little move. And then I don’t know if I would have set my stop up here. This is one of those scenarios that being that it was the first 15 minutes of the day, I would have definitely been super cautious about this. And maybe I would have done 50% of this box. And yes, it would have worked out, but this was definitely a
Cautious one. Everything before this is pre-market. I don’t really like pre-market that much, so I probably would have stayed away from a lot of the other stuff. Like I said, this would have had a short leash. Um it would have been like a B- minus setup or or a C setup. This was not an A+ setup. But that’s kind of what I’m looking for. It happens on a lot of the time frames. Um the problem is, like I said, the hourly
You can kind of use it for bias. So, you got one right here. And then, you know, the market’s going down down down, you can look, okay, now my bias is going to be up. And you can kind of take it like that and use it kind of for a bias setup. And just kind of see the three bars happen and be like, okay, which way are we going? They’re hard to take because the stop loss is typically a lot. And
They don’t happen that much. Like we’re going down that one like that’s not a good one. Here’s one that would have been decent to take. It doesn’t look like much, but if you would have taken this 771, you know, that’s 30 points and it looks like nothing. I’m I’m I’m more looking on this, even though some of them play out really well. I usually look for bias only because the stop losses are massive. And um so I would use it more
As a bias than an actual move only because the stop losses are so much. But, I’m definitely looking at it on the five and definitely looking at it on the 15. If you have questions, comments, comment on the video. Um it’s not a difficult thing. I’m just kind of showing you what works, what doesn’t. Questions, come come on the live stream or comment on the video and I’ll be sure to help you out.
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