Three Ducks Trading Strategy -

Three Ducks Trading Strategy

The three ducks trading strategy is not so much a sure shot way of trading as it is a set of guidelines to follow. The term “Three Ducks” comes from the common English term- to have all your ducks lines up. Do not ask me why they decided on the particular number of three (more would be boring I guess). Now for the strategy itself. The three ducks strategy, unlike most other forms of trading strategies, has a very low complexity and as such, can be used by even the most novice of traders. That does not mean it is not used by more experienced traders either. Believe me when I say this, the three ducks strategy, if used properly almost always ensures that you can minimize your losses (of course there are exceptions, but that is a statistical minority compared to other strategies implemented).

The three ducks trading strategy is based on the use of 3 charts and repetitive checking. The entries are usually mechanical and as such, requires almost no prior special knowledge. The charts being talked about are 4 hour, 1 hour and 5 minute charts. Also being used here is a 60 period simple moving average (sma) for each of the charts. Now onto the technical details. We will be taking this example in aspect to buying.

First Step:
We first look at our biggest time difference graph (4 hour). Now, what we are looking for here is whether the current prices are above or below our 60 sma. The initiative for buying should only be initiated if the current price is above the 60 sma (denoting that the trend for the market is upwards). If it is lower, we stop.

Second step:
Similar to the first step above, we now consider the 1 hour chart and compare the current prices with the 60 sma again. This broadens our search and we can look more closely at the present market trend rather than the 4 hour chart. If the 60 sma line is again above the current market prices, we get confirmation that we are going in the right direction. If it is not above, we stop instead.

Final step:
Lastly we consider the 5 minute chart and confirm our suppositions. This further gives us a wider magnification of the current market trend. If you want an extra affirmation, look for the price going above than the last high while being above than the 60 sma. This represents a good market in the buying aspect. Just reverse the logic for selling instead.

The stop loss can also be minimized with thisif you define a range above or below which you wish to buy/sell. This is actually defined by whether you are a day or a long term trader.

The process is usually used in trading the major currency pairs (in which aspect binary options strategies are also often used), but nevertheless, the other exotic pairs can also be used as well. Just keep an eye out for the timings when the major trading for the currency pairs you are considering occur and always keep an eye out for special company promotions and holiday seasons. These can pose the threat for ranging markets. Overall be vigilant (as always) to minimize losses.

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