What are the rules that are to be followed for hooke trading strategy?

<p id="isPasted">The Hooke trading strategy, also known as the 1-2-3 pattern, focuses on identifying potential trend reversals. It involves recognizing a three-point structure where a price first moves in the existing trend direction (pivot 1), then pulls back (pivot 2) and finally moves back in the original trend direction, exceeding pivot 1 (pivot 3). The key rule is that pivot 3 should not exceed pivot 1's height for a valid 1-2-3 pattern.&nbsp;</p><p>The breakdown of the rules:</p><p>1. Identify the Trend: Determine the prevailing trend (uptrend or downtrend) before applying the pattern.&nbsp;</p><p>2. Locate Pivot 1: This is the initial point of price movement in the existing trend direction.&nbsp;</p><p>3. Recognize Pivot 2: This is a pullback or counter-trend move, forming a higher low in an uptrend or a lower high in a downtrend.&nbsp;</p><p>4. Confirm Pivot 3: This point should not exceed the high of pivot 1 in an uptrend, or the low of pivot 1 in a downtrend, confirming the potential reversal.&nbsp;</p><p>5. Trade Confirmation: Once the 1-2-3 pattern is identified, traders may look for further confirmation signals (e.g., candlestick patterns, volume analysis) before entering a trade.&nbsp;</p><p>6. Set Stop-Loss: A stop-loss order should be placed to limit potential losses, often just beyond the high/low of pivot 2.&nbsp;</p><p>7. Target Profit: Traders should set profit targets based on their risk/reward ratio and the overall market conditions.&nbsp;</p><p>In essence, the Hooke strategy is about:</p><p>Trend identification: Understanding the existing market direction is crucial.</p><p>Pattern recognition: Identifying the 1-2-3 reversal pattern.</p><p>Confirmation: Seeking additional signals to validate the pattern.</p><p>Risk management: Setting stop-loss orders to protect capital.</p><p>Profit taking: Setting appropriate profit targets to maximize gains.&nbsp;</p>