It says “… the 240 min chart will also let me see if there is a change in sentiment QUICKER THAN A DAILY CHART”
ok then. i probably won’t bother needing a daily timeframe to be already established in the same direction when taking 4h trends. although if there is a daily timeframe going the other way, i might skip it.
if i look for a higher aligned daily timeframe , seems like i would miss out on lots of nice 4h trends, coming in much later on and getting little profit… might have to manually backtest this idea. hopefully i don’t get into too many trend less environments. i was just thinking the babypips way - align with a higher timeframe.
thanks again (and the duck doc is really funny…)
Hello thefisherman - I’m not 100% sure of what your getting at with your 3 different comments? This “system” has always and originally not meant to be a “system” but rather, a framework, for you to create your own view of the market, and your own “system”. Likely this style won’t fit everyones eye, but I certainly get a great deal of positive info from it.
a question : what about dealing with correlation, as correlated trades can increase risk? nothing on this is mentioned in the duck doc. should we wait till a trade gets to break even before opening up another one (takes away correlation risk) ? but that would mean missing out on opportunities while we wait, especially if it’s a 4h (longer timeframe) trade.
I’ve been thinking about this a bit recently. I have only had a maximum of three trades open simultaneously, but of course there’s a correlation question whenever you have more than one open. My solution for now is to just make sure I check a correlation table before opening a second trade, to see how it relates to my first one. If it’s doubling my risk, then I will probably reassess the whole idea. So it’s just another step in considering the trade; the same as checking the calendar and using the position calculator.
@harpoon & @Shojin: If you follow Andy’s method, you should not be getting correlation problems, due to the fact that you should be pitting the strongest currency against the weakest currency as he instructed.
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[li]Original post: Improve Your Trading By Looking For Clues In The Market
[/li][li]Video: Euro Pound Correlation | Question and Tip | 3 Ducks
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For example, assuming USD is strong (or weak) and EUR or GBP are weak (or strong), then before trading EUR/USD or GBP/USD (which are correlated), one should first look at EUR/GBP to see which is the better choice so as to trade ONLY the EUR/USD or ONLY the GBP/USD (but not both).
There is also a PDF entitled “[B][I]How to Search the Market for Profitable Clues[/I][/B]” about this but I don’t know the link.
remember that theres nothing wrong with using forex currency correlation to your advantage …but you have to think smart to ensure you are going with the flow …generally the best approach is to seek out the individual currecy that is steering / dominating the G8 plays
get it in your pairs and wait for the ducks to line up
Ive been a big fan of andy for many many years and post regularly on his thread at Trade2win when I can
I drop my FXCorrelator indicator on the posts to show how the currencies are stacking IN SUPPORT of Andys calls …
the 3 ducks is an excellent trading Framework …so I would recommend people look at it
Yes, I do that when there is an overlapping currency in the pair, but the other day I had a EURGBP and a USDCHF trade open at the same time. No overlapping currency there, but the correlation table does indicate some correlations at certain timeframes. As it turned out they both went the wrong way at the same time in this case.
You could, but it would be preferable to actually understand how the risk is stacking and put 1% in the right place, rather than spread across three possibilities. Identifying which one of the potential trades is the best set-up is probably a better idea. I believe Andy rarely has more than one trade open at a time. I do not have the experience, yet, to readily identify the best choice every time.
I looked that up; I hadn’t heard of it before. Looks interesting, but would involve more indicators. It’s very tempting to add more indicators to 3 Ducks, as it’s such a simple system, but I’m trying my best to resist this as much as possible. I’m trying to follow it as it is so I can make a fair evaluation of whether it works for me or not. Changing timeframes or adding indicators means I’m no longer following this system.
say i was in one setup, and another setup offered itself (but first hadn’t got to BE though). i thought i check the correlation coefficient of the new one. if it’s not highly correlated , i can take it. is that correct approach? and do i pick the coefficient for the timeframe i’m dealing with (e.g. use 4h if it’s 4h trend trade)?
If having a hard time with currency’s and correlation etc… You can try stocks, I switched to stocks 7 months and haven’t looked back. Thousands of stocks to choose from. I still look at Forex too don’t get me wrong, but found the stock market easier personally. But Forex is great as well, I like to trade both really.
jay: but US market going down for last year. you’d think forex would be a better bet in times like this…you couldn’t trend trade on the daily timeframe with stocks most of the year (going long), so that would be a problem . what strategy did you succeed at? from learning i gather that intra day share trading is too hard. most short term share traders use trend trading on a daily timeframe, from what i gather
and if you could answer my last q that would be great. and thanks again for your help (and everyone else too).
shojin/others: thanks for the correlation table. i’m using it. hey, which coefficient do you use? is it perhaps daily for short term trading, or it doesn’t work like that (and which is for h4 time-frame?). my books don’t explain this aspect. and some people calculate it, and they seem to do it differently from each other, so that is even more confusing to me…
I do believe you guys are just complicating things a bit much with the correlation tables!
My advice, is to “keep it simple” and just [B]LOOK[/B] at the charts. You can quickly see if any such possible correlations exist by looking at H4 charts side by side. Your “eyes” and your “mind” can see much more than correlation tables.
Remember, that your first scan for “3Duck” candidates is at the H4 level and that filters out most of the charts leaving you with maybe 4 or 5 candidates at most for the week ahead.
I think you might be right: keep it simple. I’m trying to better assess whether I’m getting the most out of my current trade, or whether I should be adding to my position, before thinking about other pairs.
Yes I agree with those comments too Carnino. I’ve watched a lot of Andy’s videos & nowhere on there or in his posts have I seen him refer to anything other that the usual repetition he goes through when setting up the 3 stage process.
If it’s worked consistently for him & long standing regular thread posters for nearly 10 years without the addition of other analysis then why does it need improving now?
well, Andy does mention correlation in one of the videos i saw, about not doubling up on risk …
who wants to wait till one trade gets to BE before launching another , so i do need to know about correlation…maybe no one really knows the answer (about which coefficient to use)… in the mean time i’ll use my eyes visually comparing the pairs , as i do see correlation that way (great tip)…