I also had good week with gold and oil.
Congrats on that! 
Was that just using the Ducks?
I don’t follow Gold but Oil has certainly been moving recently - fortunately charting well too! I have traditionally always been a short term intraday trader but am looking to extend my trading horizons and i am looking at the triple 60 sma’s as a way of doing that. I still use my 15m chart and method alongside the 60 sma but am using the 1H and 4H 60sma’s to justify keeping a position open longer.
Since my own method is based on ma’s I am hoping these will blend well - but it is early days!
What has been your own experience so far with the triple 60’s?
Yes, using Captain’s method only.
No. In this case (Monthly-Weekly-Daily), you want to replace the Daily 60 SMA, Weekly 60 SMA, and Monthly 60 SMA with their equivalents on a single (Daily) chart.
So, the Daily should remain as 60 SMA. The Weekly should be 60 x 5 = 300 SMA. And the Monthly should be 300 x 4.333 (approx. avg.) = 1300 SMA (rounded).
So, if you insist on going down this road, [B]use 60 SMA, 300 SMA, and 1300 SMA on the Daily chart.[/B]
But, I think you’re making a mistake by stretching the TF’s beyond the H4-H1-m5 of the original concept.
More on this in a later post. Right now, I’m going to watch the Preakness. Then have dinner.
Cheers.
Hello again, Norm
As I see it, the problem with stretching the original H4-H1-m5 time-frames to Weekly-Daily-H4 – or even further to Monthly-Weekly-Daily – is as follows:
While most [I]Ducks[/I] traders get into newly formed trends relatively early, you will be waiting for signals to develop on the larger time-frames, and getting in much later, if at all. On your really stretched out M-W-D trio of TF’s, watching for everything to fall into place will be a little like watching paint dry.
If you’re under the impression that you have to find [I]trends on the Monthly chart,[/I] in order to capture [I]trades that last for months[/I] – let me argue against that idea.
One of the key tenets of the [I]3 Ducks[/I] methodology is that the [I]same entries[/I] work for day-traders, swing traders, and position traders. [I]It’s the exits that are different,[/I] for traders using those different trading styles. The core concept here is that the market may be willing to give you a lot more than the TP you select at the beginning of a typical intra-day trade. So, maybe it’s not such a good idea to limit your potential profit with an arbitrarily chosen TP. Maybe it would be a better idea to let your profit (or a portion of your profit) run, as the old trading adage recommends.
A new position that you are about to take can be divided into two or even three parts with different profit targets. The first portion could be an (anticipated) intra-day trade, with a modest profit target (TP) – say, 30 pips. The second portion could be a more venturesome trade, with a profit target in the 50-100 pip range (depending on nearby support or resistance levels, as the case may be), and with a trailing stop to protect profits on the way to your profit target. And the third portion could be allowed to run without the limitation of a pre-set TP, but protected with a trailing stop.
In the ideal case, the first portion of your split trade will hit your modest TP, and bank 30 pips. The second portion will hit your more distant TP, and bank 50-100 pips. And the third portion will run as far as the market allows, ultimately ending in stop-out when your trailing stop is hit. The trader in this (ideal) scenario could have booked 80 to 130 pips in [I]realized profit,[/I] and have 100 pips (or more) of [I]unrealized profit[/I] in the last (open) leg of his trade – while you are still sitting on your hands, waiting for your Third Duck (on the Daily chart) to fall into line.
Except in the case of blind, dumb luck, it’s not possible for a trader to buy at the bottom of an upmove, and sell at the top of that move. But, the [I]3 Ducks[/I] trader who is using the H4-H1-m5 charts is positioned – to enter early and profit early – much better than the trader who is using the M-W-D charts. The early bird (forgive the duck pun) in this case will capture the larger portion of that upmove.
Bernard Baruch, the legendary stock speculator in the early 20th century, is credited with saying this about capturing a portion of a price move,
“You can have the first 20%, and you can have the last 20%. I’ll take my 60% out of the middle.”
The H4-H1-m5 charts give the [I]3 Ducks[/I] trader a decent chance of capturing 60% of a big move. On the other hand, the M-W-D charts are likely to leave you watching 60% of the move (or more) pass you by.
.
There is no relationship between the SMA’s in your first question, and the ATR’s in your second question.
You’re trying to make an [I]apples-to-oranges[/I] comparison.
[I]Roughly speaking,[/I] the ATR will [I]approximately[/I] double when the TF quadruples.
So, for example, the ATR(14) on the H4 TF will be [I]approximately[/I] double the ATR(14) on the H1 TF.
But, don’t attempt to use this approximation in any practical way.
Instead, use the [I]actual[/I] current ATR for the TF in question, if you are comfortable with this method for placing your stops.
The SMA’s have a fixed relationship to the time-frames you have chosen to use. This is what our previous discussion was all about.
To repeat, there is no relationship between (1) the periods of the SMA’s and (2) the ATR’s (which are measured in pips). Apples and oranges, as stated before.
.
Hi Norman,
I hope you don’t mind if I add a few thoughts here. I am not a pure Duck Hunter because I only usually trade one instrument rather than multiple markets and therefore it does not offer me sufficient trades - on its own. But I have often kept it on my charts in its original form as a further guide and confirmation of where we are in a trend - and as a result I am convinced that it does work.
BUT…I fully agree with Clint that it is NOT a good idea to extrapolate this same principle to a D-W-M TF series.
My reasoning is that although I have always traded from MA’s they do, however, have to make sense in what they are telling me in the context of the actual market environment that we are living in at the time. When we are using the 4H-1H-15/5m TFs they are all working within the current broad set of global fundamental factors that are influencing the price at the moment. Even a 60 period SMA on the 4H is only looking back at the average price over the last 10 days. Therefore the 4H-1H-5m is logically giving you a comparative picture of how prices are evolving within the context of the same current underlying fundamental causes. The larger fundamental picture does not change so very fast but prices jitter around within the overall trend often quite illogically and spontaneously - and therein lies the logic of the 3 Ducks: it is highlighting whenever the near term movements are again starting to add to the underlying trend - and the same underlying trend that the 4H is currently working with.
But if you now apply the same principle to the M-W-D TFs it is an entirely different scenario. The Daily chart is showing current price relative to average movements over the last 2 months or so, but the Monthly 60 SMA is looking at a simple average price over the last five years! This time period can, and often will, include all kinds of events and fundamental changes that have been and gone and are no longer relevant to today’s trending factors.
In addition to this, the price movements in pips on this M-W-D TF are huge before anything changes with respect to these 60 SMA lines which creates two difficulties. Firstly, you can see a trade move even 300 pips in profit and still return to zero and beyond even within the same overall movement - that is a great pyschlogical negative. Secondly, the stop losses have to be quite substantial and can still be hit (and possibly even after having monitored your trade for many days) - that is a great psychological and financial negative.
By way of example here is a screenshot of Daily EURUSD from end of last year and the US elections and beyond. You could have entered a short on 11/10 and seen it move about 200 pips in your favour, only to see it spike back up over 400 pips leaving you over 200 pips minus (red and green circles).
Also, when you look at the lows achieved in Dec around 1.0400 in the blue rectangle, the market has since now reached over 1.1200 - and it still has not crossed back over the equivalent monthly 60 SMA (1300 SMA on Daily) to give a buy signal.
The Monthly chart is still living the Obama years and we are well into Trumpism now, so there is no logical, meaningful relationship here between factors still incorporated within the monthly 60 moving average and those driving the current daily prices - look at the monthly chart below - just an example …
I am not saying don’t trade longer term charts. I am only suggesting that the 3 Ducks is not the right tool for that. Something based around horizontal S/R might be much more effective on those TFs.
Just some thoughts on some issues worth considering as you look into this matter.
Aloha Clint,
Thank you much, once again, for the extensive care you take with your responses. You have truly helped me much along the way.
Per your quote above: The intent that I had with trading 3 Ducks on the larger frames was to be in keeping with the commonly acknowledged proposition that there is much less noise, hence much more dependable signals, on the larger frames. I understand that it’s the size of the stops and targets that determine whether one is a scalper, swing or positional trader, and that one can find the most accurate entry on the smallest frame (if he’s quick enough!) after having seen a good entry on a larger frame. The issue I’m dealing with is this: You say that waiting for a signal on a weekly or monthly is like watching paint dry and that I can miss opportunities that traders on the shorter frames will catch. Why, then, do so many teachers promote the idea of never trading below the daily, and some even promote the weekly? On the wall right in front of me is a line graph showing the increased average profitability on the higher frames. I guess my bottom-line question is this: With these seeming contradictions, where is the best “fishing,” and why? Perhaps you can address this once again with these considerations in mind.
Thank you,
Norm
Hello again, Norm
• Two days ago, you were asking about stretching The 3 Ducks into a [B]higher-TF/position-trading[/B] system, using the W-D-H4 charts, or even the M-W-D charts, instead of the original H4-H1-m5 charts. I argued against that way of applying The 3 Ducks, based on nothing more than my intuition, and my own brief experience with trying to do exactly what you were asking about.
When I tried what you’re proposing, it didn’t work for me, and I assumed that my experience was typical. Therefore, I assumed that it won’t work for you, either. I could be totally wrong about that, and maybe I should have softened my tone in speaking about the idea.
• Now you’re asking about position trading in general, and that’s a much broader topic than simply asking whether you can reconfigure The 3 Ducks to accomodate position trading. Regarding this broader topic, I would suggest that the decision to pursue position trading, as opposed to any other style of trading, is guided [I]more[/I] by the temperament, lifestyle, and time availability of the individual trader; and [I]less[/I] by considerations of relative profitability (as displayed on your wall chart), or the desire to avoid market “noise”.
There is a huge difference – in time spent and in energy spent – between trading the lowest TF’s and trading the highest TF’s. The trader who is attracted to scalping generally cannot succeed as a position trader. And vice versa.
I suspect, from having corresponded with you over many months, that you lean toward position trading, because it suits your temperament, and because you see it as fitting comfortably into your lifestyle in a way that a more active and time-consuming trading style would not.
If I’m right about that, then position trading is definitely where you should focus your attention, concentrate your study, and develop your trading skills. I’m just not convinced that The 3 Ducks methodology is the best one to apply to position trading.
I believe that longer-term (as in position trading) currency prices are driven more by fundamentals than by technicals. I’m strictly a technical trader. I have very little confidence that I can comprehend fundamentals accurately enough to apply them to trading. Therefore, I’m not temperamentally suited to position trading. And that means that I’m not the right person to advise in depth on position trading.
When you asked about SMA’s on higher-TF charts, I felt comfortable fielding your questions, because they involved only math. I think I should have helped you sort the math, and then left it at that – without editorializing on position trading.
You need Andy’s advice on how (or whether) to apply The 3 Ducks to higher TF’s. I think that, somewhere in this thread, Andy has addressed that question, but I don’t have a link to direct you to. I note that on page 2 of his ebook he specifically states that The 3 Ducks methodology is applicable to any currency pair, and any market – [I]but, he doesn’t say any time-frame.[/I] Make of that what you will.
I’ll wrap this little monologue with one other comment.
You mentioned that there is much less “noise” on higher TF’s. I would add that:
One trader’s noise is another trader’s buying (or selling) opportunity. It’s all a matter of perspective.
Cheers.
.
Thank you, Clint.
Take care
Thank you Manxx,
You’ve given me quite a new perspective to consider, and I will be saving your text to file and rereading it.
Thank you for your efforts. Please feel free to drop in at any time.
Take care,
Norm
just wondering what experienced duck users think about trading the little consolidation setups within 4h trends as they occur often enough. here 1h and 4h 60sma are aligned and a 5min 60sma crossover would give you an entry in the middle of the range??? but i would think nobody goes in in the middle of ranges ?
I rather wait till price come to MA60 on m5 and/or h1 to enter with h4 trend. When price is far from ma60, probability is lower that it will go further. Usually deeper pullback is imminent.
USDNOK 1st TP hit, 2nd one waiting for OPEC, but it seems people are positive for higher oil prices.
My own feelings on this (the gold one) is that the downward steepness of the 60 sma on the 5 min indicates there is a corrective move going on that has not exhausted itself yet (or reversed the bigger picture). The price is well above the 60 sma on both the 4h and the 1h which provides room for the 5min to fall without disturbing the overall upmove on the longer TFs here.
Technically the price was above the 5in 60 sma…but only just!..and with a steep downward slope maybe it could have been wiser to wait for a full candle above the 5 min - which hasn’t yet happened.
Hindsight is easy - I just hope these observations might help a bit?
Yes, thanks. Anyone else would like to add their thoughts?
