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KC 123 Strategy vs The Setup One | Which one is my Favourite?

KC 123 Strategy vs The Setup One | Which one is my Favourite?

the Setup 1

If you’re looking for a trading method which has been proven to work then you’ve come to the right place.

I started to trade a strategy we call the Setup 1 strategy back in 2011. I have coded indicators to show this setup pattern. It is originally based on the concept introduced by the late, Dr. Bill Williams of

This strategy can be used to trade Cryptocurrencies, Bitcoin and the rest, Stocks from Amazon and Apple all the way to Penny stocks. You can even trade it on commodities of all kinds including Energy markets, Soft and Hard commodities, Bonds and everything else.

The SEtup 1 strategy has a proven edge. It gives you 70% Win Rate. This is not just number plucked from space. We have proof.

I also trade the KC 123 method. Here is a Step by Step Guide on How to Trade the KC123 Method. In fact most recently I have switched entirely to KC123 method. I will give you the reasons why I took this decision.

We have a modified version of the KC (Keltner Channel) Indicator coded for AIMS members. We also have Entry Alerts for this method called AIMS The Hunt 2.0 Indicators. You have a choice of 3 Entry indicators to choose from,

  1. AIMS The Hunt 2.0 – The Seed
  2. AIMS The Hunt 2.0 – The Cherry
  3. AIMS The Hunt 2.0 – The Banana

You can use all three or any one of the above indicator to time an entry.

The Question however is, what is the difference between KC123 and the Setup 1 Method.

I would like to answer this using the following charts. The chart I have chosen is a stock symol:ESRT. I have live traded this stock on my real account and shared results with everyone. However the point is not that. The point is KC123 Strategy vs The Setup 1.

  • The Setup 1 using these indicators
  • AIMS The Gator Indicator (Watch this Tutorial to Learn More)
  • AIMS The Box Indicator (Check out FREE version of this amazing indicator for tradingview)
  • AIMS The Wave Indicator (Watch free tutorial on this page) and
  • AIMS Entry Alert v5.1 (Watch this FREE Tutorial Video)

The Purple Line in the Setup 1 plays a pivotal point. It is the most important study. It helps with timing the perfect Setup 1. It keeps us in line with the 5 times higher time frame.

Higher probability setups are breakouts in the direction of higher time frame trends.

Dr. Brett Steenbarger


I am assuming that the reader knows what is a Setup 1 and What is the KC method. If not please read these articles and watch the relevant videos. Alternatively you may search this blog using Keywords like Setup 1 and KC.

The KC Midline is the The Purple

The Purple is a the Red line of the 5XHTF.

It is also roughly equal to 100 SMA or EMA.

The KC is based on 20EMA. If you plot the 100EMA on the current time frame and purple together it will give you nearly the same picture.

Likewise if you plot a 20ema of the 5XHTF on to the current time frame it will automatically become the 100EMA.

Because the math works like so, 20EMA x 5 = 100EMA.

Moreover, a five times higher time frame e.g. M5 chart, has 5 candles of the M1 (One minute) chart inside it. So the Average of the last 20 Candles of the M5 chart will be the same as the average of the past 100 candles of the M1 chart. 😕 Scratching your head? I hope not.

Hence The Purple of the Current Time Frame = The Midline of the KC of the 5 times higher time frame.

Peak of AIMS Wave that creates Wave 3 = KC Outer Band.

When price goes to outer bands of the KC and pokes it, then on the 5x lower time frame you will see a Peak of the AIMS WAve / AO histogram indicating Wave 3.

Now the charts.

Chart 1: A perfect Setup 1 that I traded earlier this year.

On this Chart you see a Beautiful looking (perfect) setup 1 (I traded this stock in real)

Chart 2: A Perfect KC123 Setup

On chart above you see the same stock with the same crosshair pointing to the Setup but on the 5XHTF i.e. the weekly Chart. The blue arrows indicator Rule 1 and Rule 2 of the KC Method. Rule 1 is the Poke of The Outer Band and Rule 2 is Reversion of price back to the mean, i.e. the midline (20ema).

Chart 1 is Perfect Setup 1 Chart 2 is Perfect KC 123 Setup.

Chart 3: The Fusion of KC and Setup 1

This chart has the KC of the Weekly chart superimposed onto the Daily chart. In tradingview there is a feature to display indicator from a different time frame. Same stock, same setup different time frame.

Check that it is a setup 1.

Check that it is also Setup of the KC123 Method.

The KC Point 1 (poke of KC on Weekly) = Wave 3 on Daily Chart

Check that Wave 4 on daily chart is touch or price near midline of KC of Weekly chart (or price near purple)

If you pay attention to the above 3 charts, you will notice that these are the same patterns but different ways to see it. I give you a choice. Do you want to go to Spain by British Airways or Emirates? Both great airlines, both will take you to a great holiday spot. You pick!!!

Chart 4: Let’s take some indicators off so we can see price clearly

Shows same setup same stock with no gator and purple. Weekly KC, (which is equal ot 100ema KC)

Chart 5: shows AO of the 5XHTF (weekly) chart brought to the D1 chart. (hunt pattern )

Chart 6 : Shows same setup, same chart, weekly chart, is a Monarch The Hunt Pattern.

Chart 7: shows the LOBOT 2 lines setup. 10 above 20, price pulls back to 10

This is Why I have chosen to Trade The first or 2nd PULLBACK within the START of a Trend.

the Setup 1
Move the Slider to Compare the Two Screenshots

Finally: Let’s See How These Setups Looked like at the time

I will use the tradingview feature of Bar Replay to show how this setup would have looked like to you at the time back in Jan 2021.

Our Stock Scanner Picked $ESRT as a Perfect Setup 1 and it looked like this on the Daily Chart

The 3 Rules of the Setup 1 all Met Perfectly: Rule 1: Gator is Sleeping Rule 2: Box is Tight Rule 3: AO is Close to Zero Line

Meanwhile on the Weekly chart, the same setup looked like this, a Perfect KC123 Setup.

The Setup on the Right – The KC on the Left – Together they are a LETHAL WEAPON
Picture of Jay C.
Jay C.