Hi all,
Just open the chart on Monday morning (8.28 Gmt+7) found that all duck are lining up at EurGbp; 
But, the SMA looks pretty flat on H4,
What do you think Captain?
I’m not the Captain, so forgive me for jumping in here. But, I wanted to point this out —
-- click the image to enlarge it --
Yes I agree, the support looks strong.if I am not wrong that is also the low of donchian channel (55) low
Hi FMIC,
In response to Harpoon’s queries about trading the H4, you wrote,
I understand what you’re saying: begin by placing your stop behind the swing on the M5 and then trail it behind subsequent swings, even if it gets to H1 or H4 levels; and you conclude by saying, “If you only trail on the H4 then you are failing to understand this dynamic of the 3 ducks working together and you are effectively only trading one duck, namely the H4.”
But in the very first post of this thread, Captain seems to allow for what Harpoon suggested, even within the 3 Ducks framework. Here’s a quote from Captain: [quote=“Captain_Currency, post:1, topic:6430”]
Stop-Losses: This is where you can make this system your own. If you are a short term trader you may want to put your stop-loss above the highs on the 5 min or the 1 hr chart. If you are more of a positional trader you may wish to put your stop-loss above a high on the 4 hr chart.
[/quote]
He seems to say that, even within the 3 Ducks framework, a trader is at liberty to place his initial stop on H1 or H4. Without a doubt, 3 Ducks’ focus is the entry technique, but even within the 3 Ducks framework, Captain encourages the liberty to place one’s stops where one pleases and doesn’t say anything negative about that approach. (There are advantages to both approaches, but that’s beside the point.)
I’m trying to reconcile what you and Captain have written, if they are reconcilable. Perhaps you can shed some light on the matter.
Thanks,
Norm
[quote=“NormanA, post:3162, topic:6430, full:true”]
I’m trying to reconcile what you and Captain have written, if they are reconcilable. Perhaps you can shed some light on the matter.[/quote]
- Firstly, my answer was originally intended as a reply to Harpoon’s specific query and not as a general answer!
- Secondly, I also stated and I quote “… don’t take my Trailing suggestion as a “rule”. It was merely just one possibility out of many. Each currency pair has its own personality and quirks and the markets change continually. This requires that one also needs to adapt the trailing mechanism to best fit those conditions and that is best achieved by investing time in gaining knowledge as well as experience in trading.”
- Thirdly, the Three Ducks is a Method and not a Strategy (with explicit rules). Don’t be so rigid about it - It’s a guideline. You can colour outside the lines if you wish. What is important, is that you understand what you are doing and why. Use the 3 Ducks as a “skeleton” and then build and “flesh it out” depending on your personal style of trading.
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Can Captain or anyone else shed some light on this?
In Post 1, where Captain describes his system, he writes
If I understand him correctly, he’s saying that an entry on M5 when the ducks line up justifies an immediate trade on the H4. That seems like an awful leap. Granted, the entry is a good one, but H4 is 48 times the scope of M5. What say ye?
Thanks,
Norm
Hello Norm,
I guess, in this case, I’m “anyone else”.
I highlighted that sentence in your quote (above), because that’s what I want to talk about.
There is no such thing as an entry on the m5 chart, or an entry on the H4 chart.
There are two price series: a BID price series and an ASK price series.
You can go LONG (loose terminology: buy) at any time, at the prevailing ASK price.
Or you can go SHORT (loose terminology: sell) at any time, at the prevailing BID price.
When you take either one of these positions, you are not entering on a particular chart – you are entering at a particular price-point, at a particular time.
Prices can be displayed any number of ways. The 5-minute chart and the 4-hour chart mentioned above are just two of the ways that prices – including your entry price, your TP, and your SL – can be displayed.
If you follow the 3 Ducks methodology, and decide – after analyzing the 4-hour, the 1-hour, and the 5-minute charts – to take a position, you are not entering on the 5-minute chart, or on any other artificially subdivided time-frame. You are entering a real market, in real time, at the prevailing price in that market at that time.
Your choice of a profit-target price, and your choice of a stop-loss price, may be based on price-action over the recent few minutes, or over the recent few hours, or over the recent few days. Those choices might even be based on price-action over the past several months or years. However you make these choices, they depend on your perception of dominant trends and of important support and resistance levels. But, no matter how far back in time you look in order to establish your TP and SL levels, the TP and SL orders you place are placed in the here-and-now – in the real market, in real time.
If you and I each take a LONG position in a particular pair, at exactly the same time, it doesn’t matter that you entered after analyzing the m5 chart, and I entered after analyzing some other time-frame. You and I will have identical LONG positions, entered at the same identical price.
You might place your stop-loss at a level very different from where I place my stop-loss. But, your stop-loss, and my stop-loss, reside in the same real-time market.
If you have chosen a SL level based on your analysis of the 4-hour chart, while I chose mine on the basis of the 1-hour chart, then maybe I’ll get stopped-out for a loss, while your trade will survive minor drawdowns and go on to close in profit.
But, all of this action occurs in the only time-frame that matters: real-time.
The market doesn’t have time-frames. The market simply is. The market has price, and the market has now. Everything else is price history.
Time-frames are artificial constructs invented by traders to facilitate looking at price history in different slices, or tranches. Time-frames clump all the price-action occurring in a particular segment of time into one neat package, represented by a bar or a candle. That price segment – 1-minute, 1-hour, 1-day, etc. – is then displayed as four “key” prices – open, high, low, and close – ignoring all the other price-action which occurred in that segment.
In other words, a “time-frame”, as we commonly think of time-frames, is a partial look at price history. It’s a look at price history which reduces the complexity of that history to those “key” prices I mentioned above.
Consider these two charts, and tell me how they differ:
These charts show exactly the same price-action – the AUD/USD from March 26 until today. The upper chart is a 5-minute chart, and the lower one is a 4-hour chart. The only difference is the detail, contained in the 5-minute chart, which is missing from the 4-hour chart.
When we look to a higher time-frame chart to gain insight into the price action of a particular pair, we are really just looking farther back in time. Typically, a 4-hour chart will display price action over the past couple of months, while a 5-minute chart will display price action over the past couple of days – unless the 4-hour chart is stretched horizontally, and the 5-minute chart is squeezed horizontally to make them cover the same period of time. Which is what I did to the charts above, in order to make a point.
The point of this exercise is that when we look to higher time-frame charts to establish logical TP and SL levels, we are simply looking farther back in time, to find highs and lows, or other indications of probable future resistance and support.
No matter how far back in time we look, when it comes to placing a TP or a SL, the only time-frame that actually exists is “the present”.
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Masterful post, above, from Clint. This part - in particular - should be a sticky and/or included in the site’s education pages.
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Aloha Clint,
Thank you, once again, for a very masterful and clear response to my query. I’ve recently been gaining understanding about the fractal nature of the market/time charts, but your step by step explanation made it as clear as a bell, at least relative to my former level of understanding. What began to make things click was this:
The kicker being that the H1 is much closer to the M5 than the H4, and yet H4 may be the one that kicks butt because of more favorable price action.
But what really made it exceedingly clear was your chart comparisons. That visual aid made it very obvious that one may put his SL (and TP) on any number of scales or scopes or time frames, all based on the same entry. This opens up a whole new realm of possibilities for me and, I assume, for any other trader who grasps the principle clarified by the chart comparisons. Until now, I’ve been locked into the view that if one places his entry while viewing a particular time frame that he is to trade that time frame, that is, to set his SL (and TP) based on the price action he sees there. Now I see that one may place an entry on, say, the M5, and then view the price action on any number of time frames and then pick the most likely winner.
Thank you, Clint, or as we say in Hawaii, Mahalo Nui Loa (Thank you, very much)!
Take care,
Norm
Will try this system this week.
I have some few questions:
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Is the indicator “moving average” same as the “simple moving average”?
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Also which currency pair is this system more effective?
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what time frame do you base your entry point?
Thanks!
Hi matzee have you read this?
Thanks! Just read!
Do you guys put an expiry on your pending orders? Let’s say I will put a pending order and I will be away for like 12 hours from my computer, what the ideal hour/s of expiry on the pending order?
Another question,
Let’s say you’ve got your target profit already and you’ve seen that the trend is still going and still has 3 ducks on it, is it advisable to make another open position? or why not to open another one?
I know this is kinda subjective question but I would like to know your opinion about this.
Has anyone used this strategy and has it worked? apart from the author of the thread of course
Read the thread and you’ll find numerous users, including myself.
And yes, it has and still does work
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Hi guys,
I am new to babypips even if I am lurking since months now. I finished the school of pipsology and started a new demo account few weeks ago.
I work full time and I want to trade on forex to have extra income, while gaining experience and maybe one day making this as my full time job. But it will be a long journey and I reckon that I still have a lot to learn.
But I also need something to start with, I’ve read almost all threads about forex systems here and I’ve chosen 3 ducks setup rules for a couple of reasons (traded since 10 years, can fit my lifestyle that leads me towards a more “swing” trader than day trader, etc).
Now, I have a question, maybe stupid, but I hope someone more experienced than me can answer.
Captain Currency’s pdf says that SL and TP levels are subjective, and I get that, but I would like to know from you which method do you use and why: do you set 30 pips as suggested? By doing that I got stopped out a lot of times on short positions (I live in EUR and trade EURUSD and EURJPY for now), even if the price was still down SMA60 on 4 hours and 1 hour charts. I am trying to change SL from now to above previous high on 1hour chart and see how it goes, but I’ve read about other people looking at ATR to find possible stop losses.
What do you think? What kind of strategy do you use and why? I am really curious and I want to learn what is the best way to approach this area… It’s crucial for me as it’s obviously related to RR and it can really make a difference.
Thanks
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3 ducks is a good trading strategy to use. If you are interested in something extra, I will advise you to read the 16 candles thread too. Thanks.
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Would it be advisable for a total newbie to try 3 ducks and 16 candles? Which one would be more suitable for a newbie? TIA! 
I’m in the same place (although a bit behind you as I just finished lessons).