Need strategy evaluation with opinion

Trading Systems
#1

So some of you are probably familiar with the 3 Ducks trading system if not then here familiarise your with it (https://www.fxstreet.com/education/the-3-ducks-trading-system-200802200000) well i took and applied a different concept to it. so backtesting this strategy on its own with no modifications had a 50% win rate and a breakeven rate of 33% meaning if 100 trades were taken 33% needed to be winners for this system to be profitable with a risk-reward of 1:2RR.

now i added the 200 ema as a baseline as a further confirmation of trading with the long-term trend, Trix as an exit indicator, Volume price trend as volume indicator, and Coppock curve as a second trend confirmation indicator, atr to set stops loss.

the concept for entry works the same (For buy price is above 60 sma on 4hr,1 hr and 5 mins, get 5 mins structure break then enter on timeframe based on what typa trader you are either 5mins scalping, 1 hr intraday or 4hr swing to positional and vice versa for sell) but as the original author said you can use this strategy based on how you trade which is why i am solely attracted to it, as a swing trader i take entries on the 4hr time frame but just added those extra indicators for more confluence

here is what it looks like.

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so what do we think ?

#2

I have never really favoured the Three Ducks system because it uses charts on three different time-frames. For me, just using three different MA periods on your individual time-frame would achieve the same result with less fuss and potential for ambiguity.

But having said that, if all 3 parameters say buy, it’s a buy.

#3

I think if it works for you, then continue. The worst mistake a trader makes is to keep changing the process.

As a trend trader I also use the 3 ducks line-up - Daily trend movement, 4 hr entry, I hr trend confirmation. I doubt that many would find a 200MA very useful unless they are long term positional professional traders, as are the big bank boys. What happened a few months ago is history.

For daily trading, while the 100MA is better, I consider the 60EMA to be the best ‘signal’. Buy above, sell below. There is also argument for using 50-20 MA, which is just as effective.

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#4

Well i am a swing trader which is why i use it

i am in the process of forward testing to see how it performs but i i know i will have to tweak it down the line or even change indicators as there is but load of to test to see which fits the algo.

also are you an indicator based trader aswell?

#5

be careful to overfitting

#6

Will be sure to keep in mind

#7

I am a price action trend trader utilising Ichimoku 8-22-44 set up. I also use MACD 3-10-16 and RSI 10 with a 50 line, and ATR 10, and PSAR 0.09-0.50.

Tried and tested profitable strategy with a 55% win rate, three years old. However the key is being able to place a T/P, and why I use PSAR for that.

BTW - as I am a daily trader I do not need 200 MA. Best of luck with your forward testing.

#8

It is a logical concept, which is why it found popularity but it is perhaps worth noting that the original author (Andy Perry aka Capt Currency) dropped it some time ago because he said it was no longer working effectively. Maybe your tweaks have resuscitated it! :).

Entries are not perhaps the only key area to concentrate on. I think it was @tommor who recently posted an incredibly accurate and pithy insight regarding any method, which goes something like:

The entry makes the trade but the exit makes the money.

#9

The markets condition has changed but it’s a trend trading strategy so as long as it follows the underlying trend i don’t see why it won’t work effectively. Well, have to wait and see from the forward testing data if it’s still a profitable strategy with the tweaks or will it have to be ditched? :slight_smile:

#10

Rather than call this a trend trading strategy, I think it is more a strategy that trades in the direction of the main trend but takes chunks out of it rather than staying with “the trend until the end”. And I think that is indeed where its strength lies.

However, I think the weakness (if any) in this approach probably lies at the short end, i.e. the 5min line. But there is certainly an element of “tradeability” if one just looks at the 4H and 1H SMA’s.

I did a quick chart of the EU with just those two lines (4H and 1H 60SMA) and there are often good moves when the price returns and closes through the 1H SMA on the same side of the 4H SMA. Which is, of course, entirely logical as a trend continuation move.

I am not suggesting that you change your approach at all, but if you find in forward testing that you are getting too many fake moves or stoploss hits then it might be worth focusing on adjusting the short end first. For example, you could try 15min instead of 5min or just use the 4H-1H with a fixed TP and SL with a sensible R:R, or a combined fixed/trailing stop, etc.

But I do think you could try to define the exit parameters with more clarity.

Just some thoughts. :slight_smile:

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#11

interesting thought what i do is this on the 5 minutes when i mark the high or low that needs to be broken for the ducks to be aligned i have a 5 pips buffer from the high or low and this is where i put my buy or sell stop i see this as a sort of filter to avoid fakeouts. but i will definitely try the 15 minutes as an entry timeframe.

For the exit parameter, i have the Trix indicator for my exit i still need to explore different periods but it seems a period with 12 and a smoothing of 9 is working all right for the moment as the smoothing smooths out short-term price fluctuations that could cause necessary early exits or late exits for the matter. but if its becomes slow i have trailing stops as another measure. My SL is based on 1.5 ATR and 2times my SL for a 1:2 RR always.

but if you need more clarity i can give more or any input in how it can be better improved at all i am all ears :smile:

thanks

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