Best Thread The 3 Duck's Trading System

[shadowninja]

Are they impregnated with soothing cream?

 

[nealc99]

3 Ducks Indicator

I have created a 3 Ducks Indicator which works on any time period chart.

5 min = RED
1 hr = BLUE
4 hr = RED

Suggested Use: Monitor on a 4hr chart - when all 3 are above/below current price, switch to 5 min chart to verify entry.

 

[Captain Currency]

Don’t know why I missed this the first time, but there seems to be a misunderstanding of how simple moving averages are constructed and how they might be utilised in this simple yet effective system from CC.

In an SMA, each data point is given equal weight. The number of data points selected by the period parameter is used to arithmetically sum those data and then divide the result by the number of data. All very simple.

When you apply the 60 period MA to a 1 hour chart, you are taking an arbitrary value, the closing price for that arbitrary hourly timeslice, using that, and ignoring all the other data between any two hourly close levels. You’re doing this on the 4 hour chart and the 5 min chart too. An SMA on a 5 min chart ignores all the other sub-5 min data between two 5 min close levels.

The thing is, using a 720 SMA and a 2880 SMA on a 5 min chart is not the same as a 60 SMA on a 1 hour and a 60 SMA on a 4 hour chart.

To take an extreme (and hypothetical) example, say the last 4 one hourly closes for EURUSD are falling on the 1.4700 level, but between those hourly closes, the price action was around the 1.4760 level most of the time. Your 60 SMA on the 1 hour chart is going to start showing the flattening that constant data point levels will induce and bringing the SMA closer toward that 1 hour datum point. However, the 5 min 60 SMA will be giving equal weight to all data and that means the majority of data at the higher levels will be producing an SMA, even with far greater number of data points, at a higher level.

Taking GBPUSD as a real life example as at close of play yesterday.

The 720 ‘equivalent’ SMA on the 5min chart gives a value of 1.9768.
The real 60 SMA on the 1 hour chart gives a value of 1.9766.

The 2880 ‘equivalent’ SMA on the 5min chart gives a value of 1.9895.
The real 60 SMA on the 4 hour chart gives a value of 1.9878.

And if we invent a 240 SMA on the 1 hour chart to be ‘equivalent’ to the 60 SMA on the 4 hour, we get 1.9888 on the ‘equivalent’ SMA compared with the 1.9878 on the real 4 hour 60 SMA reading.

When you’re dealing with systems designed to deliver smaller targets in shorter timeframes, these differences are significant, not only in realising profits from a trade entered, but from even getting into a trade in the first place.

Three points in summary

As alluded to in a number of posts above on this thread, there are inherent dangers in playing around with other people’s systems trying to make them ‘better’ or ‘easier’ or trying to personalise them without due diligence. CC uses three charts for a reason, to get accurate SMA levels and to get local SR in those timeframes (among many other things he doesn’t mention LOL!)

The assumption that SMAs are equivalent across TFs just because the numbers ‘add up’, underlines the degree to which traders use indicators without perhaps understating how they are constructed at a basic level. And if they did, why they probably wouldn’t really need them.

The selection of a timeframe, any timeframe, is a completely arbitrary decision on the traders part. It has no real meaning. The only real reality is the tick. We use TFs to make it ‘easier’ to assess data, trends, breakouts, chart patterns, and there’s nothing wrong with that. But I believe it is important we constantly hold in mind, TFs are randomly chosen snapshots of a summary of tick data. Even a 1 minute chart only shows you where the price opened, closed, its minimum and maximum during that 1 minute timeslice – not what happened throughout that 1 minute flow of time.

Which brings me to ask why do you never see Duck Curry on the menu….are Ducks are too smart to get caught or do they just go with the flow?

Well spotted TheBramble

I'm surprised the quick thinking Shadowninja did not see it before you

Kind regards :clover:

 

[Captain Currency]

I have created a 3 Ducks Indicator which works on any time period chart.

5 min = RED
1 hr = BLUE
4 hr = RED

Suggested Use: Monitor on a 4hr chart - when all 3 are above/below current price, switch to 5 min chart to verify entry.

Hello Nealc99,

Thanks for your efforts. I have been asked a few times if I could automate The 3 Duck's Trading System. I think this may be a bad idea, reasons being: you will be getting "signals" when the market is low on liquity, before news, choppy market conditions, holidays etc. You will be basically shooting at everything that moves!

I think traders will get the best results out of this "system" if they use it as a guide in addition to their own market knowledge. That way they can choose if a signal is worth taking, it will also keep a control on over trading.

You hear a lot about how traders minds mess up their trading
But there are also a lot of traders who use their minds to good effects in trading.

Automated trading has its use, but the 3 Ducks will work better when a good trader is in control of it :idea:

Kind regards, :clover:

 

[shadowninja]

Because I haven't been trying to improve it. I still have function keys for H4, H1 and M5.

 

[Sang Froid]

This made very very interesting reading and thank you for sharing. It has to some extent changed the way I utilise some of my technical analysis. However I think the biggest change I need to make is; after studying the charts for hours, comprehending all the data, checking and re-checking, using different charts to show different things and deciding that there is definitely a bullish trend and I should buy, I need to actually hit the sell button instead. This would make me far more profitable

 

[TheBramble]

Hilarious

 

[Nordtrader]

Hello Cap'n,
I've read through your thread and found it very enlightening, many thanks for sharing. I have a question which I don't think has been covered (forgive me if I've missed it):
If all the ducks are in line and we've already had a trade triggered, then what needs to happen for the system to 'reset', i.e. for another trade to setup in the same direction? Does the 5 minute need to go back to the 60SMA before going back in the same direction again? (Obviously, if all the ducks cross their 60SMAs then a trade will set up in the other direction). Hope the question makes sense.
Cheers,
NT

 

[Captain Currency]

Hello Cap'n,
I've read through your thread and found it very enlightening, many thanks for sharing. I have a question which I don't think has been covered (forgive me if I've missed it):
If all the ducks are in line and we've already had a trade triggered, then what needs to happen for the system to 'reset', i.e. for another trade to setup in the same direction? Does the 5 minute need to go back to the 60SMA before going back in the same direction again? (Obviously, if all the ducks cross their 60SMAs then a trade will set up in the other direction). Hope the question makes sense.
Cheers,
NT

Hello Nordtrader,

Yes I understand what you are asking. I have covered something like this question in The 3 Duck's Trading System ebook (which will be out next week hopefully).

Kind regards,

 

[JTrader]

This made very very interesting reading and thank you for sharing. It has to some extent changed the way I utilise some of my technical analysis. However I think the biggest change I need to make is; after studying the charts for hours, comprehending all the data, checking and re-checking, using different charts to show different things and deciding that there is definitely a bullish trend and I should buy, I need to actually hit the sell button instead. This would make me far more profitable

Very true - i know the feeling well!
Although other times, it will do enough to take out my stop, then come back in my favour.

 

[Lightning McQueen]

Very true - i know the feeling well!
Although other times, it will do enough to take out my stop, then come back in my favour.

Thats because you weren't in the trade at the correct place from the off JT

oops! sorry cap'n don't mean to poach viewers :innocent:

 

[Crap Buddist]

Deer stalker,cape, duck whistle and BIG GUN required..?

Thats because you weren't in the trade at the correct place from the off JT

Maybe the case, and maybe its a case of seeing the D.A. Ducks Ass in the first place, then shoulder an elephant guy and pull. feathers all over the place but job done.

Deer stalker,cape, duck whistle and BIG GUN required..? Seriously if people dressed suitably for occassion when in their trading office then it might stop them from peeing around so much helps put you in the right frame of mind for the job? So I suggest popping to your nearest gentlemans outfitters of distinction to load up on the clobber.

Remember To get along go along . Dead ducks are good ones.

Good luck with the book Captain.

Have a look, this is me all suited up calling the ducks into view ,ready to take on the global bank traders .

 

[JTrader]

Maybe the case, and maybe its a case of seeing the D.A. Ducks Ass in the first place, then shoulder an elephant guy and pull. feathers all over the place but job done.

Deer stalker,cape, duck whistle and BIG GUN required..? Seriously if people dressed suitably for occassion when in their trading office then it might stop them from peeing around so much helps put you in the right frame of mind for the job? So I suggest popping to your nearest gentlemans outfitters of distinction to load up on the clobber.

Remember To get along go along . Dead ducks are good ones.

Good luck with the book Captain.

Have a look, this is me all suited up calling the ducks into view ,ready to take on the global bank traders .

R U sure its just poppers, mushrooms, and stale chickens that u do :cheesy:.

Seriously - is that u in the photo?

Cheers.

EDIT: Just realised u r joking about wild duck chases, and so its unlikely the photo is you!

 

[cats eyes]

Hi Capt'n. My practise account with FXCM jumps from 1hr to 1day, perhaps when I progress to a live account I will have more choice but for now I'm stuck with this. My first thought was to use 1hr, 30 and then 5min with 60 sma on all three charts. Would this still validate your 3 Ducks' ?

 

[Captain Currency]

Crapbuddist I thought it was Sherlock Holmes!

Hi Capt'n. My practise account with FXCM jumps from 1hr to 1day, perhaps when I progress to a live account I will have more choice but for now I'm stuck with this. My first thought was to use 1hr, 30 and then 5min with 60 sma on all three charts. Would this still validate your 3 Ducks' ?

Hello Cats eyes,

No, it would'nt be the same.

Kind regards,

 

[madharde]

Hi Capt'n. My practise account with FXCM jumps from 1hr to 1day, perhaps when I progress to a live account I will have more choice but for now I'm stuck with this. My first thought was to use 1hr, 30 and then 5min with 60 sma on all three charts. Would this still validate your 3 Ducks' ?

Cats eyes,

Are you trying to access 4hr charts on FXCM? If so then please see the post below.

http://www.trade2win.com/boards/forex-first-steps/28218-4hr-charts.html

Also Captain thanks for sharing this system.

 

[linalm]

How do you go about finding the pairs to trade



Hi everyone,

What a great system! Thanks Captain Currency for sharing it with us and for sticking around this community to help newbies like me.

To those of you who have been trading this system with a real account, I would like to ask a few questions:

1. How do you go about finding the pairs that have at list 2 ducks lined up where potentially you will find a trade? What scanner do you use, if any?
   
2. Once you find a pair with 2 ducks lined up, if you find it when the alignment of the 3rd duck has already occurred several candles back, what analysis do you do to determine that it is still not too late to enter the game?
   
3. And lastly, on the screenshot that Capitan Currency included on post #236, page 24, would any of you be so kind to please circle on that image the entry points that we could have taken according to this system?

Thank you in advance for your replies. I've learned a lot by reading the whole thread. I hope I didn't miss answers that you might already have given to my questions.

 

[chump]

1.Scanner = Eyes
2.There's no analysis to do at least for me - I don't chase the price on the short time frame.
3. LOL...you really need all 3 timeframe charts ,but based on the 5min shown I'd be entering around .9245 to get under the round number on the dip.

 

[linalm]

1.Scanner = Eyes
2.There's no analysis to do at least for me - I don't chase the price on the short time frame.
3. LOL...you really need all 3 timeframe charts ,but based on the 5min shown I'd be entering around .9245 to get under the round number on the dip.

Thanks for your reply, chump.

Any others doing something different?

 

[shadowninja]

Thanks for your reply, chump.

Any others doing something different?

In any other context, that would be so condescending. ("chump")

I just scan the 4 in the competition (above). Any more and it gets ridiculous. I tried 7-8 before but it was just not enjoyable in any way.

And remember to trade when all 3 ducks are moving in the same direction (up or down).