The Three Ducks trading strategy is a trending strategy. The principle of trending strategies: buy when prices rise and sell when prices fall. But all this is uncertain, when exactly to open a position , how to determine entry points?
This is where the Three Ducks trading strategy can help. It identifies upward and downward short-term trends and market entry points.
The name “Three Ducks” comes from the saying: “to have all your ducks lined up”. The expression means that everything was correct, in order (built in one line).
We have three ducks: the first duck (first step) helps you identify an existing uptrend or downtrend, the second duck (second step) helps confirm the direction of the trend, and the third duck (third step) helps to identify favorable moments to open a deal in the direction of the trend.
Characteristics of the trading strategy Three Ducks.
- Platform: MetaTrader 4 .
- Currency pairs: EUR / USD , GBP / USD .
- Timeframe: H4, H1, M5.
- Hours: European and American sessions for short-term trading, around the clock for long-term trading.
- Broker: Forex4you , InstaForex , RoboForex , Fort Financial Services .
Read more about the RoboForex broker in the article “ RoboForex broker. Trading conditions, advantages and services of the company »
The Three Ducks trading strategy involves using three different timeframes: 4-hour (first duck), one-hour (second duck) and 5-minute (third duck). Only one trend indicator is used - a simple moving average with a period of 60 (SMA60).
Trading strategy "Three Ducks". Rules of work.
Step 1 - The first duck.
The first thing we need to do is look at the oldest timeframe, in our case a 4-hour chart. Determine where the price is located, above or below the SMA60. The price is below the SMA60, this suggests that a sale transaction is possible.
The second thing we do is switch to the hourly chart. The price should also be lower than SMA60, this gives us a confirmation of the trend. If the price is above the SMA60 on the hourly chart, then we will not proceed to the next step.
On a 5-minute chart, we open a sell deal when the price crosses the SMA60. For additional confirmation, you should wait until the price breaks the last low on a 5-minute chart. If this condition is met, the price will be below the SMA60 in all three charts, that is, we can say that all three ducks lined up in the same direction.
Stop loss and take profit for the Three Ducks trading strategy.
Setting stop loss depends on the type of your trade. For short-term trading, stop loss should be placed slightly above the previous maximum on a 5-minute or hourly chart. For long-term trading, we set the stop loss, focusing on the 4-hour chart.
You can use a fixed stop loss, the size of which again depends on the type of your trade. You can also use trailing stop to increase the profitability of transactions.
Take profit, like stop loss, also depends on the type of your trade. It can be used for this support and resistance levels , Fibonacci levels or fixed take profit.
In the considered example, we use the Fibonacci level to set the take profit. As a result, we have 76 points of profit at a risk of 25 points. The ratio of profit to risk is 3: 1.
This is where the Three Ducks trading strategy can help. It identifies upward and downward short-term trends and market entry points.
The name “Three Ducks” comes from the saying: “to have all your ducks lined up”. The expression means that everything was correct, in order (built in one line).
We have three ducks: the first duck (first step) helps you identify an existing uptrend or downtrend, the second duck (second step) helps confirm the direction of the trend, and the third duck (third step) helps to identify favorable moments to open a deal in the direction of the trend.
Characteristics of the trading strategy Three Ducks.
- Platform: MetaTrader 4 .
- Currency pairs: EUR / USD , GBP / USD .
- Timeframe: H4, H1, M5.
- Hours: European and American sessions for short-term trading, around the clock for long-term trading.
- Broker: Forex4you , InstaForex , RoboForex , Fort Financial Services .
Read more about the RoboForex broker in the article “ RoboForex broker. Trading conditions, advantages and services of the company »
The Three Ducks trading strategy involves using three different timeframes: 4-hour (first duck), one-hour (second duck) and 5-minute (third duck). Only one trend indicator is used - a simple moving average with a period of 60 (SMA60).
Trading strategy "Three Ducks". Rules of work.
Step 1 - The first duck.
The second thing we do is switch to the hourly chart. The price should also be lower than SMA60, this gives us a confirmation of the trend. If the price is above the SMA60 on the hourly chart, then we will not proceed to the next step.
On a 5-minute chart, we open a sell deal when the price crosses the SMA60. For additional confirmation, you should wait until the price breaks the last low on a 5-minute chart. If this condition is met, the price will be below the SMA60 in all three charts, that is, we can say that all three ducks lined up in the same direction.
Stop loss and take profit for the Three Ducks trading strategy.
Setting stop loss depends on the type of your trade. For short-term trading, stop loss should be placed slightly above the previous maximum on a 5-minute or hourly chart. For long-term trading, we set the stop loss, focusing on the 4-hour chart.
You can use a fixed stop loss, the size of which again depends on the type of your trade. You can also use trailing stop to increase the profitability of transactions.
Take profit, like stop loss, also depends on the type of your trade. It can be used for this support and resistance levels , Fibonacci levels or fixed take profit.
In the considered example, we use the Fibonacci level to set the take profit. As a result, we have 76 points of profit at a risk of 25 points. The ratio of profit to risk is 3: 1.
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