Dynamic Trend Following

An introduction to DTF...

Before starting on the second trading course, allow me to briefly demonstrate what the general idea is.

The key to my signature Dynamic Trend Following system is held by a phenomenon that I like to call the EMA Dance. Trends, stages of expansion are lead by an EMA9 on a specific timeframe, and while one timeframe may be contracting (sideways), another timeframe may be in an uptrend while yet another timeframe may be in a downtrend.

For example, when markets are in a daily downtrend, we may have an hourly uptrend as price retraces the previous day candle, and in this hourly uptrend, we may find 5 minute downtrends as price retraces an hourly candle.

All these EMA trends across timeframes are connected, and we can identify them with a simple set of parameters.

In short, this is how trend works:

• When a trend ends, price crosses EMA9 and pulls back;

• Price then finds a temporary bottom into EMA50 and bounces;

• Out of this bounce, we can now look for continuation, reversal, or consolidation.

The EMA Dance

The most prominent feature of my system, evolves around the repeatable dynamic between the EMA9 and the EMA50. On all timeframes. Price tends to play ping pong in a never failing sequence that tells us if we should enter, or practise more patience.

The EMA Dance holds the simplest key to market behaviour, and lies in the understanding that when an EMA9 trend ends, price seeks EMA50, rejects (either below, at, or above), then attempts continuation, for why a new EMA9 trend has to confirm. If that EMA9 trend fails, we can short back down to the EMA50 where sellers will attempt a break down. When that fails too, price will now be in balance.

Here are a few illustrations: