Nigel, sorry for butting in, but as you seem to be in a sharing mood...
In this context, could I possibly get your thoughts on your S/L strategy? If you do not wish to share this, I understand.
Re. 5-mins previous low: As this seems to be very 'fluently' defined, I wonder if I could get your thoughts on this one too? Would you define it as
the five min. low for that day, or do you have a set percentage for lows and high?
(I shall assume that the low is under the MA... this will naturally be the case in most cases, but it
could be above, at least theoretically, I suppose.)
For instance, if you look at your 5-min. chart in your post above. why not the 'lesser' low above, following in the cluster right after?
Thanks in advance for any insights you feel like giving out - assuming you have the time, of course.
Cheers!
CJ
Hi Jyde
I'm happy to share any knowledge I have accumulated about trading, none of it is any big secret!
My view is that the 3 ducks is a lot to do with the trader's own discretion. Obviously not all 3 ducks trades are created equal. So a good deal of practice and screen time is required to become comfortable with what works best for you.
As long as price is above/below all 3 MAs when a trade is entered it's a valid entry. Outside of that rule, there's no right or wrong, so I'm not going to tell you where you should put a stop or a take profit or whatever. However I can tell you what I look at.
Disclaimer: This is just a description of what I do; I'm not advising anyone to adopt this approach and I'm not saying that this is better or worse than any other way someone else might trade!
1. In terms of stop losses, I don't really start out with any specific level in mind. Paramount in my mind when sitting down to take any trade, 3 ducks or not, is to keep my losses to an absolute minimum if price goes against me, and when price goes for me, to milk it as much as I can. I am lucky in that I trade in front of the screen so I can monitor price in real time. I have attached a chart that tries to explain where I would get out of a trade that was going against me.
2. In terms of previous low/high to be used as entry points - I am not an expert in the market but I believe the following to be true:
Take for instance you are looking to sell EurUsd as the trend is down on 4hr chart. There will be some people who are seeking to pick a bottom on the EurUsd who are looking to buy. They will pick a low on the chart under which to put their stop losses for their buy trades.
These stop losses are essentially more sell orders, which, when triggered, accelerate price to the downside. That's what happens when you get good 3 ducks trades which just charge forward into your direction. It is our job to try to identify a place that is obvious for most people who are looking at the chart; a point where buyers will likely throw in the towel and more sellers will charging come in.
This point will generally be on a higher timeframe that the 5 minute. I think the 1 hour is a good compromise, simply because more traders will be looking at the 1 hr chart than the 5 min. You want to ride on the back of these other traders.
As regards your question re my previous example, the annotated chart shows that the low of that cluster would still be above the 1 hr MA so it wouldn't be a 3 ducks trade.
Yes, theoretically the previous low could be either above or below the MA - what matters is whether price is above/below the MA when it breaks it.
Again, as I have said, all of this is up to the individual trader. Providing that price is below/above all three MAs is a matter of personal discretion. But the above is what works for me! I hope this has gone some way to answering your question.
Good trading
Nigel
