Three Ducks, but using 3 Moving Averages?

Trading Systems
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So I’ve been reviewing the Thee Ducks set-up, trying to make sure I have a through understanding of it.

I wanted to get sort of an “independent review” of the strategy, so I started a thread on r/Forex asking if anyone was trading it. The only real reply I got, the only one that stuck out in my mind, was one that said:

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“Using the same moving average… in two to three different timeframes, is the same thing as using two to three different moving averages.”

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I turned that over in my mind, trying to decide if it were likely true. After much reflection I don’t see why it wouldn’t be.

So if we were to adapt Three Ducks from single moving average over three time frames to three moving averages over a single time frame, how would we do that? This is what I’d like to explore in this thread.

As written, Three ducks uses a 60 period SMA on three time frames - 4-Hour, 1-Hour, and 5-Minute.

If we wanted to replicate the results on a single chart, but keep the same ratios, then supposedly we could use the 1-Hour chart with a (60 x 4) 240 period SMA, a 60 period SMA, and a (60 / 12) 5 period SMA.

Now I’ve got to say that, when I read that, it sounds just are ridiculous to me as it did when I wrote it. 240 period SMA? 5 period SMA? Those sound preposterous to me! Not that I have anything to base that on. It just SOUNDS wrong.

Earlier this evening, before I started this thread, I was thinking all of this over and started saying to myself “Well, I’d just replace the THIS period SMA with a THAT period SMA, and that OTHER period SMA with an EMA…” I quickly realized that what I was doing was just picking numbers out of my ass for no other reason than I thought it made me sound smart. And that made me feel really dumb.

So here I am, asking much smarter and more experienced people than myself, have any of you experimented with Three Ducks but using three moving averages over a single time frame?

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Yes, I’ve heard of traders plotting 3 sma versus staring at 3 charts. I haven’t heard of any traders doing well, or not.
Allow me to submit this to you, instead of consuming yourself with the whole MA portion of what he teaches, I’d prefer to get good at what he refers to as the ‘super star trader’ method of ‘adding to your wining positions’, that’s where the juice is at.
Google up pyramiding or adding safely to your winning position, but ONLY after you get real good at trading his system.
Greetings Reno

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This is not a bad idea for identifying direction and generating high probability trade entries. MA’s are very useful for these tactics but have taken on a poor reputation because they are so widely used by beginners. In that scenario they are as often misused as well used but that is not the fault of MA’s per se, that’s down to the beginner traders.

MA’s are the only indicators I would use and I would never drop to a time-frame below D1 for any input on multi-day trades.

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I actually use a very similar setup of moving averages (60-240-960) on a single time-frame and I didn’t even know that here this system was named 3-ducks :slight_smile:
I use the setup only as a filter, the rest is price action with chart patterns (key-levels) and candlestick analysis.

PS: a moving average on 3 different time-frames, is not the same as 3 moving averages on one time-frame.

sma
sma1047×547 15.5 KB

In orange, you have the SMA 240 on the hourly. In green, you have the SMA 60 on the H4.
You can see that they are very close, but not exactly the same.

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Your math is correct, as far as it goes.

As another poster pointed out above, even when the ratios are mathematically correct, your three derived SMA’s on one chart are not identical to the original 60 SMA on three charts.

But, the differences are slight, and you can certainly use your 5-60-240 SMA’s on a 1-hour chart, if you like that better than the way Andy presented his 3 Ducks System.

There is also another trio of SMA’s that can be substituted for Andy’s 60 SMA. You could apply the 60 SMA, the 720 SMA, and the 2,880 SMA to the 5-minute chart. Someone proposed that combination way back in 2007, right after Andy brought his 3 Ducks to this forum.

Andy didn’t say that such a combination wouldn’t work. He simply said that he preferred using one SMA on three different charts.

You can scroll back to post #7 in The 3 Ducks Trading System thread to see Andy’s comment.

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60-720-2880 on the 5-minute chart isn’t working for me. My demo platform doesn’t hold 2880 periods in memory.

I set up 15-60-240 on the 1-hour chart, and I like what I’m seeing there. Gonna wait for Saturday so I can F-12 my way, candlestick by candlestick, and see how many good signals vs false signals I can find on the various major pairs.

And not for the first time, I’m gonna wish I knew how to program Expert Advisors…

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You’re not the first person on this forum to think about automating The 3 Ducks Trading System.

But, Andy Perry strongly cautions against doing that.

Here’s what he says in his ebook –

Great Approach But Not To Be Automated

The 3 Ducks Trading System is a discretionary approach and not a mechanical system; it is a bit like the SatNav in a car. The SatNav in my car tells me which direction to drive in, it does not control or drive the car for me, I do that bit.

The 3 Ducks Trading System is a sound logical approach to help you trade in the direction of trends, observe price action and buy and sell at levels that confirm strength.

The trader always needs to use discretion and judgment, you should never attempt to automate this approach, just the same way as you would never let your SatNav drive your car for you.

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Like I said, I’m experimenting with 15-60-240 SMAs on the 1-hour chart.

I mostly want to program an EA so I can automate my backtesting/forwardtesting. Not just for this trading idea, but for any other trading idea I run across.

I’m going to disassociate this idea from Three Ducks, since I’ve departed so much from Captain Currency’s basic ideas. At best this is “inspired by” at this point.

And I don’t want his work/reputation to be tainted by any lack of success on my part.

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