The 3 Duck's Trading System

This is a discussion on The 3 Duck's Trading System within the Forex forums, part of the Markets category; (Apologies: this is a long one.) Hi – I was pointed at Captain Currency's 3 Ducks system a couple of ...

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Old May 10, 2009, 9:38pm   #796
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(Long post) Getting the entry right when using the 3 ducks strategy

(Apologies: this is a long one.)

Hi – I was pointed at Captain Currency's 3 Ducks system a couple of years ago and dismissed it at that time as too simplistic. More fool me ! Sorry Andy :-(

However, I have recently come across it again after trawling my hard drive following the end of an extended training programme on day trading. This has left me feeling frustrated at my inability to “read the runes” of the charts correctly.

Followers of the ducks will therefore understand why, on re-visiting Andy's ebook, its simplicity appealed to me. I have tested it in a minor way with tiny stakes over the last week and had some success, but I am finding difficulty getting my head around what is perhaps the most important part of the strategy, the entry.

Andy's books says: "The 5 min chart, our third duck is used for entries. What we are really looking for on the 5 min chart is for prices to get above the sma and move higher than the last high on the 5 min chart."

After showing an example, he goes on to say ... We would now be looking to buy when prices move above the last high (two candles to the left with lower wicks and two candles to the right with lower wicks) on the 5 min chart.

It's this “last high” thing that I am having trouble with. When Andy says that the last high occurs when you have “two candles to the left with lower wicks and two candles to the right with lower wicks”, must these be adjacent candles (as in the example shown in the book ) ? Because it doesn't actually happen “nicely” like that all the time !

I appreciate that you should use the 3 ducks in the context of your own philosophy, being aware where the markets are, what your own personal style is, etc, etc, etc. But even so, I have been pondering how I could find a reliable way to know that I am using the correct “high” (or “low”), I came across the idea of fractals in a thread on a forum “elsewhere”. (Ahem !)

Somebody has come up with the idea of using the “fractals” indicator available on MetaTrader. Apparently this signals “swing highs & lows”. A little googling has enabled me to get a handle on this and it seems that the definition is almost exactly the same as the one that I quoted from Andy's ebook. (Coincidence ?)

Anyway, is this a suitable tool for determining “highs & lows” for entry ?

BTW, I use Sierra Charts for replaying and practice trading and unlike MetaTrader, it does seem to have a way of configuring the fractal setup. It uses a parameter called “Maximum Length of Fractal Signals” (which it defaults to 10, but 5 is the lowest possible value and that makes sense in terms of the definitions that I've seen for fractals i.e. one high/low & two candles on either side, a total of 5).

I thought that an example would be useful, though I've not easily been able to find one ! The following charts are from EURUSD on 17th April 09. (Unfortunately, after talking about “highs”, the example is on the down side, so we are now talking about lows instead ! Sorry.)

Anyway, the other ducks are lined up and in fact have been for some time. The 5 minute duck stepped out of line overnight, but has come back in to line around 8:50am. I'm not totally sure if that would make it a suitable “3 duck” trade, but if it is, the candle setup shown is the kind that confuses me when determining the right entry point.

I've highlighted possible “lows” since 5:20am (point 1, which represents the over-night low).

To me, point 9 seems too close, but which of the others between points 3 and 8 is the best bet ?

The “Up” & “Down” legends are from Sierra's fractal indicator, (using 5 as the value for Maximum Length of Fractal Signals). On that basis, number 6 would be the one, I suppose, but I'm still not sure. (For information, the second chart shows “what happened next”. Not a massive trade and perhaps a bit spiky, but 30 points in about as many minutes seems reasonable to me !)

So, to sum up:-
1.What's the best way of establishing the “high” or “low” to use for entry ?
2.Are Fractals a suitable way of getting a rough idea for #1 ?

If you have been, thanks for listening

Reler
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Old May 11, 2009, 7:52am   #797
 
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Quote:
Originally Posted by reler;757944 When Andy says that the last high occurs when you have [I
“two candles to the left with lower wicks and two candles to the right with lower wicks”[/I], must these be adjacent candles
Reler,
I don't believe they have to be adjacent, or even immediately recent.
You're looking for a High (Low) that was formed sometime on your 5-m chart.
Depending on how you set it up, your chart could be looking back at quite a few hours worth of data. Try to spot the recent High (Low) that was formed on the information you can see.
That, be it Andy's work, or anyone elses, is the Swing point.

Of course, the Swing point could fail because of a higher (lower) one further back in time that's maybe not even shown on your chart, or because of a more powerful Swing point on a higher TF ....... or for any number of other reasons
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Old May 11, 2009, 2:20pm   #798
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just seen the 3 ducks line up at 1.3590 e/u is this correct ( long )

time is 2.15 pm gmt

british time
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Old May 11, 2009, 7:21pm   #799
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I don't usually trade after 11am, so I wasn't looking but I'd have thought that there was a duck trade on EURUSD this afternoon. Exactly when is the question and as such, this is a good illustration of the kind of problem that my earlier questions are about, so thanks for posting !

Aside from anything else, I'm not quite sure about the time you've quoted. Do you really mean GMT or do you mean British Summer Time (BST) ? Because I'd have entered either at 15:00 BST at about 1.3593 OR (more likely) at 15:10 or 15:15 BST at about 1.3605, after the price had got past the high (and because I tend to treat price levels ending "00" as significant). Loses a few pips but it seems safer to me.

But it gets us back to my original question. Can the the "leaders of the quack" (sorry, couldn't resist !), throw any light on my questions about entry points and this specific case ?

Thanks,

Reler
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Old May 11, 2009, 9:10pm   #800
 
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looks like Andy is busy robbing Post Offices, or whatever they do down there for fun, he's not been here for a while ....
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Old May 11, 2009, 9:11pm   #801
 
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btw, wtf is shergar ?
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Old May 11, 2009, 9:19pm   #802
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LOL - I've also just been looking back at the Cable chart (GBPUSD) and I reckon that I would probably have been tempted in at about 16:15 BST to buy at about 1.5115 or above for a swift 20 odd points. I probably would have been out after the first doji at 16:30, especially as that is after the end of the London session.

Again, my question is about the entry: am I on the right lines ?

Cheers

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Old May 11, 2009, 9:23pm   #803
 
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reler,
if i could ever offer you one serious word of advice in between Tiger beers, f::ck forex,
it's a complete ballax, newbie graveyard.
Stick to what the pros look at, ES, or at worst YM ......

don't take my word for it. check out all the threads. which ones offer the most get-rich-quick-sucker BS ........ the Banker's pay cheque, retail foreskin ....
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Old May 11, 2009, 10:00pm   #804
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Ummm ... showing myself up as a newb I know, but what are "ES" & "YM ?
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Old May 11, 2009, 10:00pm   #805
 
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Quote:
Originally Posted by rathcoole_exile View Post
looks like Andy is busy robbing Post Offices, or whatever they do down there for fun, he's not been here for a while ....

In Las Palmas at the moment sipping a coffee not my fav brand, Maxwell House is ...
Your welcome to join me!

Decent trends on the 4hr charts which is what you want for trading the ducks.

I fancied going long the Eur.Usd about 2 weeks ago when she closed over the 4hr sma. I knew I was going to be in Las Palmas for a while baking in the 30 degree heat so I took a bit of a swing on it at 1.3130, stop-loss at 1.2930 and a target up at 1.3375 just before the resistance. It worked out, +245 pips for a 200 pip risk, nothing special but it will keep the fox from the door

Not really a decent opps on the 5min chart today on eur.usd - noting paying off too well.

Still I'le be following the trendie pairs and looking for some decent enteries in the days ahead.


Let your profits roll when the 4 hr sma is pointing and not flat!

Andy
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Old May 12, 2009, 6:21am   #806
 
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Originally Posted by Captain Currency View Post
In Las Palmas at the moment sipping a coffee not my fav brand, Maxwell House is ...
Your welcome to join me!
Andy, if it's cooler than it is here, I might take you up !

Garry
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Old May 14, 2009, 10:19pm   #807
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Originally Posted by rathcoole_exile View Post
reler,
if i could ever offer you one serious word of advice in between Tiger beers, f::ck forex,
it's a complete ballax, newbie graveyard.
Stick to what the pros look at, ES, or at worst YM ......

don't take my word for it. check out all the threads. which ones offer the most get-rich-quick-sucker BS ........ the Banker's pay cheque, retail foreskin ....
Rathcoole_exile, like I said, I am kind of lost with some of your terminology: "ES" and "YM". What are these please ?

Cheers,

Reler
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Old May 14, 2009, 10:30pm   #808
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Quote:
Originally Posted by reler View Post
Rathcoole_exile, like I said, I am kind of lost with some of your terminology: "ES" and "YM". What are these please ?

Cheers,

Reler
The ES is the future of the S&P500 and the YM is the Dow Jones future.

cheers
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Old May 14, 2009, 10:43pm   #809
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Cool, thanks Mozy
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Old May 15, 2009, 11:55am   #810
 
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MTF Moving averages.

You may find this useful. The indicator is a multitimefram moving average so you can put the 1hr ma on the 5min chart.

The attachment shows how i setup the 12ema flavor of 3d's

Chart 5min, all MAs have a 1 period shift so that the indicator does not repaint. Ie, your looking at the last bars ma value.(I find this is usually better and on the 15 and 1hr it will hardly make any diff)
yellow: 12ema
blue: MTF MA: 12ema, timeframe 15 (15mins 12ema)
red: MTF MA: 12ema, timeframe 60 (1hr/60min 12ema)

Obviously the original duck will work with 60sma setting.s

maybe of use. I find colored bars saying above or below dont give the same picture. With the MAs on the same screen you can see convergance and divergance forming.
KISS

Sven
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