Three ducks strategy: profit hunt

Sometimes, a phrase «everything of ingenious is simple» is relevant to Forex market. Probably this phrase was the motto of people who developed Three Ducks strategy. This strategy is so simple and easy to understand that every beginner is able to grasp it easily and quickly. Moreover, a trader does not need to download any special indicators, as all we need is available in any trading platform.

 

Strategy specifics and indicators

Three ducks strategy: profit hunt

The main indicator used in the «Three Ducks» strategy is a moving average with the period 60 and the application cover on Approach, as shown in the figure above.

Trading will be carried on the basis of this indicator. For finding points of protective orders, we use Fibonacci retracement levels from the last lows and highs.
So, when settings are done, a trader can start searching signals. This procedure can be divided into three stages.

Stage 1

Three ducks strategy: profit hunt

First a trader shall examine four-hour timeframe and compare the position of the price versus to the moving average line. Our chart shows that the price level is below the white line; therefore it is not expected that the price will change direction in the near future (of course, on condition that there will not be important news releases).

Stage 2

Three ducks strategy: profit hunt

Now, let’s switch out attention to the hourly chart and look for confirmation. The price is below the moving average. We can conclude that the global trend is descending; so in the short-term, it is advisable to open sell positions. We will not consider signals to buy until the moving average line goes below the price level.

Stage 3

Three ducks strategy: profit hunt

The third step or a «Duck» as it has been called by the strategy creators will be done on the five-minute timeframe where we will search entry signal. We have a signal to open a sell position if, after crossing the moving average line from top to bottom, the price will consolidate there. The chart shows that it has not happened yet; therefore, a trader shall not open a buy positions as the main rule of trading suggests not to trade against trend. We remember that, according to the higher timeframes, global trend is descending.

Authors of this strategy recommend traders to use currency pairs with high volatility and trade on the European and American trading sessions because even during these sessions an indicator will give only few signals.

 

Protective orders

Three ducks strategy: profit hunt

Traders are recommended to choose one of the ways of placing protective orders depending on the trading strategy:

  1. For the long-term trading: stop-loss level is at the high or low on the four-hour timeframe. In accordance with the money-management rules, take-profit order is placed at the distance at least twice as much as the distance between the price level and the stop-loss level.
  2. For the medium-term trading: the stop-loss level is the next point of Fibonacci grid. If Fibonacci level is 20 points closer to the point of opening a trade, it is advisable to use the next level. Take-profit is placed on the opposite line of Fibonacci grid, in accordance with money management rules.
  3. For the short-term trading: stop-loss is placed at a distance of 20-30 points from the opening price. After closure of five candlesticks in the desired direction stop-loss is moved closer to the moving average line and then to the break-even zone. For convenience a trader can use the option of trailing stop with the settings to move after reaching 20-30 points in the desired direction.

As you can see, the strategy is very simple; however it does not consider some factors, which can affect price movement. 

Three ducks strategy: profit hunt
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