I have been successfully trading the 3-ducks methodology, so I feel I can contribute my 2c.
[B][U]TREND[/U][/B]
- First, I look to [B]trade in the general direction of the trend[/B] - meaning, I also look for confirmation on the Daily chart. This could be as simple as above/below the 200SMA on the Daily. I avoid counter-trend trades.
Currently, for me, this trend means US-dollar bullish. I have been shorting EURUSD, GBPUSD, AUDUSD and long USDCAD for the past 6+ months. I had minimal involvement in the March-April bullish rally, just sat it out.
Furthermore, [B]I almost never look at the 5 min chart[/B], as I find it leads me to overtrading. I focus on the D, 4hr and 1hr charts.
[B][U]TRADING[/U][/B]
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The [B]majority of my monthly profits will arise from 3-4 good trades[/B] (100-150 pips). Another good portion will achieve 50-70 pips. Therefore I wait for these good setups. This usually means 2-3 good trades per week. It pays to be patient.
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As a corollary, [B]you donât have to trade every day[/B] on this method. For example, Mondays are usually very slow and whipsawy, never gaining momentum, thus I take them off. I often start my trading week on Tuesday. I also reduce my trading significantly on the first week of each month, when itâs high-impact news time.
If I come into a day and I have no signals, I prefer to take the day off rather than sit around the computer forcing opportunities, which usually leads to whipsaws. The good ones jump off the screen, you will know them.
[B]It pays to be patient.[/B] In our âday jobsâ, we are trained to be always on the go, and measure our success by our productivity - how many widgets (emails, reports, presentations, deliverables etc) we push out.
[B]In trading, the game is won by waiting for the right setups.[/B] Our success is measured by the discipline to [U]âsit on yer handsâ[/U], as Andy likes to say.
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[B]Good trades take off and never look back.[/B] The good ones will give 30+pips at least right off the breakout (within the first hour) and thus the opportunity to bring my stop to breakeven. Then they will run to my profit target of 100 pips smoothly.
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If a trade backfills and trades sideways following the breakout, itâs usually a wash or a losing one. If the market canât get any momentum going within an hour or two of the breakout, I look to [B]minimize my losses[/B] on these.
[B][U]RISK MANAGEMENT[/U][/B]
- I tend to [B]move my stops to breakeven+5 after I have unrealized profits of about 30-40 pips[/B]. This is against what Andy teaches, but I like the concept of a âfree tradeâ. This is inline with my observation (4), that good trades will just keep going. Thus, I minimize losses on the loss-making trades in this way.
Once I am in a trade, I often use a [B]trailing stop off the 1hr chart[/B] - I close my positions if I have a break of the high (for shorts) or low (for longs) of the last 3 bars on the 1hr chart.
- You have to be disciplined with your [B]money management methodology[/B]. Usually my risk is 1% of my account NAV per trade. I take positions of up to 2% when I have high conviction on a trade (say 3-4 times per month). I also usually never have open more than 3 positions at a time, but usually just 2.
[B][U]PSYCHOLOGY[/U][/B]
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[B]When I have a significantly positive day[/B] (which means the market has moved over 100+pips in my favor and I have earned >5%), [B]I take the next day off[/B], for two reasons: (i) This keeps me humble, so that I donât give back the profits from overconfidence and (ii) wide range days are often followed by consolidating days / reversals. I want to enjoy my profits.
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[B]My aim is to end the month green[/B] - ie. with a higher balance than I started the month. Not a certain % return, not a certain pips amount, not a certain number of profitable days per week. Just profitable at the end of each month. This keeps me focused and not chasing trades.
âTake care of the downside and the profits will take care of themselvesâ.
If you can, I would suggest you look into and [B]take Andyâs Advanced 3 ducks course[/B].
I cannot recommend it highly enough. His material is clear, concise and simple. It was highly valuable to clarify some concepts for me and setting me on the right course. The cost of 300eur is more than made up by a single successful trade, if you are trading full lots. I am a happy customer.
Then, the most important step is to trust that this system works (it works for me) and follow it, rather than trying to change it. Minor tweaks are recommended to personalize it, but the core trend-following idea is solid.
âŚnever trade gbpnzd for short term anywayâŚsoâŚbutâŚaheeemm⌠yeah, anyway 
