Three Ducks Binary Options Strategy

Another binary options trading strategy is one that involves very easy steps that can be performed even by novice binary options traders. The Three Ducks binary options strategy is quite easy to implement. Aside from this, it also has the potential to provide good returns if performed correctly. The idea of this strategy is to analyze and make trades based on multiple time frames that are indicative of the trends relating to each other.

The strategy’s name Three Ducks comes from the common phrase “get your ducks in a row”, which means to make preparations for a certain task, or to become efficient and well organized. If you have seen a family of ducks swimming in the pond, you will likely see them lined up neatly in a row. This is what this strategy is all about as well. It sets up trades in order to make fruitful profit out of them. All of this is done using different charting time-frames.

The Three Ducks binary options strategy is a pretty straightforward strategy because it all the binary options trader needs to do is to follow a set of guidelines. While this strategy, has a very low complexity that is perfect for most novice of traders, it does not mean that it can not be used by expert traders as well. If executed correctly, the strategy almost always ensures that a binary options trader can minimize his losses in entered trades.

The Three Ducks strategy is a lesser known binary options strategy, and has been published by experts just recently on different trading advice websites. One thing is common among the analyses of the strategy: that it is relatively easy to master and deploy. This trading strategy is based on the use of three charts and the repetitive checking of these charts. The trades are entered manually requiring almost no prior special knowledge aside from the basics.

Multiple Time-Frame Analysis

Perhaps the first concept that a trader should learn for this strategy is the use of multiple time-frame analysis. This is a method that resolves considerable difficulties experienced by traders in determining the current trend of their chosen assets. Traders use multiple time-frame analysis because different time-frames often provide varying opinions. Instead of looking only at one time-frame, the trader is provided with multiple dimensions to work with.

To give an example, an hourly frame could indicate that the price of an asset is currently pushing through a bullish trend. On the other hand, a longer time-frame could demonstrate that the overall trend is actually bearish and that price is merely undergoing a temporary bullish retraction. Expanding the time frames actually gives traders a more complete view of what’s going on regarding the price of an asset, as opposed to having a limited view of price movement.

If multiple time-frames are not analyzed, traders are provided with conflicting results that can lead to the adaptation of a range of varying viewpoints about the current directional movement of the same asset. Multiple time frame analysis can remedy such problems and provide a system that can give traders more accurate interpretations. The idea is for the trader to study the price action of selected assets using both long and short time-frames.

In turn, the trader can now compare findings with the intent of rejecting or verifying a viewpoint on the current visible trend. The Three Ducks strategy revolves around this concept. Basically, a trader will aim to get his three ducks in a row by studying the directional movement of an asset on trading charts using three different time-frames. If their findings are lined-up, then the trader would have identified the true trend.

Although we have mentioned that this strategy is easy to implement that even novice traders can perform it, some experts advise against it saying that it is not ideally suited for new traders because of the significant amount of skill and knowledge required to implement it correctly. Whether to use it or not is the trader’s choice. For those wondering, the Three Ducks is not a new concept as it has already been popular among Forex traders.

Mechanics of the Strategy

The Three Ducks strategy, as the name implies, involves three steps and three time-frames. The first step is to use a common SMA. Most references to this strategy use the 60 SMA, so we’ll adopt that as well. To start the strategy, the trader first looks at the biggest time difference in the chart he uses. What the trader should be looking for is whether the current price is above or below the 60 SMA chosen.

The current position should be noted and the initiative to buy should only be deployed if the price is above 60 SMA, denoting an upward trend for the market. If it is lower, disregard. Next, we consider a shorter time-frame and compare the current prices again with the 60 SMA. This allows the trader to drill down on the true nature of the trend as he can look closer at the present market trend as compared with the broader time-frame in the first step.

It may be the case that the trend is bullish on the broader time-frame and bearish on the narrower time-frame. It can also be the case that they may show the same trend. In this case, the trend is true and validated. If the 60 SMA line is again above the current market price, the trader is able to get confirmation that the price is going in the right direction, and he is on the right track. Again, if it is not above, he disregards, stops, and starts over.

Lastly, the trader should consider the shortest time-frame to confirm his suppositions. This provides him with yet a more drilled-down magnification of the current market trend. If the trader wants extra validation regarding the trend, he looks for the price going above than the last high while still being above the 60 SMA line. This represents a good buying position and a Call option may be placed here. If the reverse is true, selling positions prevail and the trader should make a Put option.

The stop loss can also be minimized with this if the trader defines a range above or below which he wishes to buy or sell. This depends on whether a trader trades by the day or is a long term trader. Nonetheless, the process is usually used in trading the major currency pairs, and also other exotic pairs. Timing for this strategy is especially important when major trading in currency pairs are affected by special instances that pose the threat for ranging markets.

Example Procedure

Here’s a concrete example of the mechanics outlined above. Let’s presume a trader considering a certain asset. To implement the three ducks, he first needs to select three ‘ducks’ or time-frames. For this example, we will use 5 minutes, 1 hour, and 4 hour. The trader then installs a 60-period simple moving average (60 SMA) technical indicator on each of the three charts. This will be the basis of whether the price trend remains true or not.

Analysis for duck 1 is done by studying the 4-hour trading chart. Basically, the trader’s mission is to confirm whether the 60 SMA resides above or below the current price value. If price is higher than the 60 SMA, then a bullish trend is present and possible opportunities may exist to activate new CALL binary options. In contrast, if price is below the 60 SMA, then a bearish trend is prevalent indicating that selling opportunities may be present.

Analysis for duck 2 or the one hour chart is then performed. By doing so, the trader aims to verify that this chart also confirms the same verdict as duck 1. If it does, the trader can now proceed on to step 3. However, if the one hour chart contradicts the findings of duck 1 by revealing an opposite trend, then the trader needs to completely reject this asset and move onto others by starting again.

Finally, the trader inspects duck 3 or the 5 minute trading chart. If this time-frame again confirms the trend verified by ducks 1 and 2, then this is a strong signal to execute either a Call or Put binary option, depending on the trend. If the 5 minute chart does not produce evidence confirming that of the first two ducks, then the trader should abandon this asset and instead seek others by reapplying the strategy from the first step.

As each of the three ducks performs a specific function in this setup, a trader can acquire a very good verdict by implementing this strategy. The four–hour time frame serves to identify the current and prevalent trend; the second acts a secondary confirmation and the third helps identify quality trading opportunities. Consequently, the trader can gain an in-depth understanding about the price movement of assets by undertaking such a study.

You can learn about many strategies on our website. To try out this strategy, you can also choose from among the top binary options brokers we have compiled. Stay tuned for more tutorials from our site.

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