DEM, DTF and Position-/Risk- Management
How to combine lower and higher timeframes to find the best setups...
“DEM” - Diagonal Entry Model
“DTF” - Dynamic Trend Following
For a second instruction on my DEM system, I wanted to demonstrate how we can identify higher probability entries. I tapped a little bit into this with my instructions for the Diagonal Entry Model, where there is a section that explains how to use the model inside ranges.
The principles of that example apply similarly when you see a higher timeframe entry diagonal setting up. You can zoom in and find a lower timeframe setup to get exposure into that higher timeframe break out.
Therefore, if you want to increase your lower timeframe probability, then look for higher timeframe setups, and zoom in to a lower timeframe to see if an entry in that direction is setting up.
For example, if the hourly has produced a BoT, then wait for an hourly entry diagonal, and zoom in to M5 to see if you get a setup. When that M5 triggers, it means the hourly is breaking out at the same time, which increases the probability of follow through.
Regardless of a setup working or not, the key to profitable trading is risk management. I drastically cut a trade at the first sign of failing during the opening stage. As readers know, the EMA9 on the timeframe that gave the entry, is the leaidng indicator that tells me to stay exposed or cut the trade, partially or totally.
With that in mind, here is an example from a real trade.
Monday’s price action set up gave an H1 BoT (hourly break of trend) and set up a bounce. I marked it as a sniper entry, but if you understand the DEM system (Diagonal Entry Model), what I have marked as a sniper entry is basically the second H1 BoT. This break of trend gives a nice scalp, but the real entry diagonal still has to form. It did that into the close, and left it to the Asian session to decide direction.