Phoenix Foundation

[ganthiraj]

This thread is intended for the presentation of the system I trade nowadays. The basic structure of the system is not my own but rather an adaptation of the 3 Ducks' Trading System: The 3 Duck's Trading System

 

There are several beauties of the 3 Ducks'. First and foremost it is the simplest and most efficient way I've yet seen to make sure you're trading with the trend. It allows you to trade only if price is with the trend on all of the three timeframes.

 

I realized quite some time ago that a trading system has to be adapted to the conditions of your life. Many, including me in the past, try to do it the other way around - which doesn't work.

 

For a long time I believed I could trade 4H charts, thinking it shouldn't be a problem finding time to check on the charts once every four hours. Working full time as I do with patients and meetings etc this turned out to be impossible. I have always felt that daily charts demand too big stop losses and too few trades, so that wasn't right for me either. The solution that I've found works for me is 8H charts which Oanda's FXTrade platform offers. The MT4 platforms has a very poor choice of timeframes in my opinion and I'm not fond of it generally either. Once FXTrade starts offering the Weekly timeframe I'll uninstall MT4 as I'll have no use at all for it then.

 

So, I started combining the 3 Ducks approach to the higher timeframes. Since I wanted the 8H to be my trigger timeframe it was inevitable really for Daily and Weekly to be the two other Ducks for me.

 

I felt that the trigger that the original 3 Ducks uses is less well suited for the higher timeframes where bar formations often are quite reliable, especially when they're in the direction of the trend.

Therefor I use Inside Bars, Outside Bars, Pinbars, Trendline breaks or S/R as my triggers. Inside bars would have to be the favourite thanks to the risk/reward they offer.

 

Another small change I made from the original 3 Ducks is that I use the 60 EMA instead of the 60 SMA.

 

Finally I've added one more filter to further increase the trend following properties of the approach - I also place a horizontal line to mark the pivot of the previous week.

 

So, for example, in order to take a long trade, these are the requirements:

Price must be above 60 EMA on the Weekly timeframe

Price must be above 60 EMA on the Daily timeframe

Price must be above 60 EMA on the 8H timeframe

Price must be above the pivot of last week (high + low + close)/3

We must have an entry trigger

 

Very simple really. And yet consistently profitable according to my backtesting and my live trading.

 

Needless to say, take profit should always be larger than the stop loss and somewhere shortly after the trade has gone into profit the same amount as your stop loss it's a good idea to move the stop loss to break even.