Dynamic Trader Workshop Summary

End-of-Wave (EOW) Price Target Zone Summary Table – Page 1

Chapter Three – Dynamic Price Trade Strategies Module 5 – End-of-Wave Price Target Zones

End-of-Wave (EOW) Price Target Zone Summary Table Copyright 2005, Dynamic Traders Group, Inc.

EOW Label and Typical Subdivisions

EOW Price Projections Primary and secondary projections. Typical Min, typical and maximum projections, if applicable Smaller time frame (sub division) EOW target to include. Ratios in bold are the primary projections for that set.

EOW 1 or A W.1: Five-Waves W.A: Usually fivewaves but may be three.

Since a Wave 1 or A is the first section of a new E-wave pattern, you cannot make projections based on completed sections of the new pattern. The EOW 1 or A will usually be at a retracement of the last section of the prior pattern. Retracements: 38.2%, 50%, 61.8%, 78.6% Smaller Time Frame EOW: EOW-5 of W.1 or A.

EOW 2 or B Usually an ABC correction. May be a complex correction.

Primary Projections Retracements of W.1 or A: 50%, 61.8%, 78.6%. A daily close past the 78.6% retracement signals it is probably not a corrective Wave-2 or B and the prior trend should continue. Minimum W.2 or B: 50% retracement of W.1 or A. Maximum W.2 or B: 78.6% Retracement of W.1 or A Smaller Time Frame EOW: EOW W.C of 2 or B projections.

EOW 3 or C Both should subdivide into fivewaves.

Primary Projections Alternate Price Projections of W.1 or A from the W.2 or B extreme: 62%, 100%, 162%, 262%. Secondary Projections External Retracements of W.2 or B: 127%, 162%, 262% Minimum W.C Target: 62% APP of W.A Typical W.C and Minimum W.3 Target: 100% APP of W.1 or A Maximum W.C and Typical W.3 Target: 162% APP W.1 or A Smaller Time Frame EOW: W.5 of 3 or C projections.

Continued on the next page.

Copyright 2005, Dynamic Traders Group, Inc., www.DynamicTraders.com

End-of-Wave (EOW) Price Target Zone Summary Table – Page 2

EOW 4 Often ABC but may take the form of any “complex” correction.

Primary Projections W.3 Ret: 38.2%, 50%, 61.8% Secondary Projections APPs of W.2 projected from the W.3 extreme: 62%, 100%, 162% Minimum W.4 Target: 38.2% retracement ofW.3. Maximum W.4 Target: 61.8% retracement W.1-3. Smaller Time Frame EOW: EOW-C of 4 target zones if it appears W.4 will be an ABC.

EOW 5 Five-Waves

Primary Projections APPs of W.1-3 (range from the beginning of W.1 to the end of W.3) projected from the W.4 extreme: 38.2%, 61.8%, 100% Secondary Projections APPs of W.1 projected from the W.4 extreme: 62%, 100%, 162% Ext Ret. Of W.4: 127%, 162% Typical W.5 Target: Either the 38.2% or 61.8% APP of W.1-3. There is not a min W.5 target. W.5 is usually complete near one of these two projections. Which projection is more likely to be near the end of wave 5 will depend on what secondary projections fall near either of these two projections. Maximum W.5 Target: 100% APP of W.1-3. Smaller Time Frame EOW: EOW-5 of 5.

Copyright 2005, Dynamic Traders Group, Inc., www.DynamicTraders.com

End-of-Wave (EOW) Price Target Zone Summary Table Copyright 2005, Dynamic Traders Group, Inc.

EOW Price Projections Primary and secondary projections. Typical Min, typical and maximum projections, if applicable Smaller time frame (subdivision) EOW target to include. Ratios in bold are the primary projections for that set. EOW 1 or A W.1 = Five Waves; W.A usually five but may be three waves. Since a Wave 1 or A is the first section of a new E-wave pattern, you cannot make projections based on completed sections of the new pattern. The EOW 1 or A will usually be at a retracement of the last section of the prior pattern. Retracements: 38.2%, 50%, 61.8%, 78.6% Smaller Time Frame EOW: EOW-5 of W.1 or A. EOW 2 or B Usually an ABC correction but may be a complex correction. Primary Projections Retracements of W.1 or A: 50%, 61.8%, 78.6%. A daily close past the 78.6% retracement signals it is probably not a corrective Wave-2 or B and the prior trend should continue. Minimum W.2 or B: 50% retracement of W.1 or A. Maximum W.2 or B: 78.6% Retracement of W.1 or A Smaller Time Frame EOW: EOW W.C of 2 or B projections. EOW 3 or C Both should subdivide into five-waves. Primary Projections Alternate Price Projections of W.1 or A from the W.2 or B extreme: 62%, 100%, 162%, 262%. Secondary Projections External Retracements of W.2 or B: 127%, 162%, 262% Minimum W.C Target: 62% APP of W.A Typical W.C and Minimum W.3 Target: 100% APP of W.1 or A Maximum W.C and Typical W.3 Target: 162% APP W.1 or A Smaller Time Frame EOW: W.5 of 3 or C projections. EOW 4 Often an ABC but may be any form of a complex correction. Primary Projections W.3 Ret: 38.2%, 50%, 61.8% Secondary Projections APPs of W.2 projected from the W.3 extreme: 62%, 100%, 162% Minimum W.4 Target: 38.2% retracement ofW.3. Maximum W.4 Target: 61.8% retracement W.1-3. Smaller Time Frame EOW: EOW-C of 4 target zones if it appears W.4 will be an ABC. EOW 5

Should always be five-waves. Primary Projections APPs of W.1-3 (range from the beginning of W.1 to the end of W.3) projected from the W.4 extreme: 38.2%, 61.8%, 100% Secondary Projections APPs of W.1 projected from the W.4 extreme: 62%, 100%, 162% Ext Ret. Of W.4: 127%, 162% Typical W.5 Target: Either the 38.2% or 61.8% APP of W.1-3. There is not a min W.5 target. W.5 is usually complete near one of these two projections. Which projection is more likely to be near the end of wave 5 will depend on what secondary projections fall near either of these two projections. Maximum W.5 Target: 100% APP of W.1-3. Smaller Time Frame EOW: EOW-5 of 5.

Dynamic Trader Workshop – Chapter 2; Module 2 - Support Material – Page 1

Chapter Two – Elliott Wave Analysis Module 2 –Trends and Counter Trends

Trends and Counter Trends Overview There is one trend and two frequent counter-trend patterns we will learn in this course. Five-Wave Impulse Trend: Made in the direction of the higher time frame trend direction. 1. 5 Distinct Sections 2. Higher highs and higher lows (bull trend) or lower highs and lower lows (bear trend). 3. Section Highs and Lows do not overlap

Simple three-wave or three Section ABC Counter Trend (correction) 1. If Section Highs and Lows overlap, it should not be an impulse trend and should be a counter-trend. 2. The most typical counter-trend is three sections which make up a simple ABC correction. Complex Counter Trend 1. More Than 3 Distinct Sections 2. Multiple Sections Overlap 3. It is very difficult to project the completion of a complex counter trend. 4. The most important thing is to recognize it is a counter-trend and not an impulse trend.

Important of Identifying the Position of a Market Within A Trend or CounterTrend. 1. Helps determine which side of the market to trade. If a trend or counter trend is not complete, you trade the side that the trend or counter trend is moving. 2. Helps identify if the patterns signal that a trend is complete. If the pattern is in a position to be complete, it will be an early warning of a reversal and you will trade the other side of the market.

Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com






Chapter Two – Elliott Wave Analysis Module 3 – Five Wave Trends

Five Wave Trend Rules 1. Wave 2 cannot exceed the beginning of Wave 1. 2. Wave 4 cannot make a daily close into the closing range of Wave 1. 3. Wave 3 cannot be the shortest in price of Waves 1, 3, and 5.







Chapter Two – Elliott Wave Analysis Module 4 – Three Wave Counter Trends

Simple ABC Counter Trends The most frequent counter trend is a simple three-wave, ABC, also called a zigzag. We always assume at least a three-wave corrective pattern will be made even though some other more complex or irregular corrective pattern may eventually be made. There are variations of a three wave correction such as an irregular ABC and others, but in this course we are going to keep it simple and focus on the most typical three-wave, correction - the simple ABC.

GUIDELINES FOR A SIMPLE ABC 1. A Wave B should not exceed the beginning of Wave A. 2. Wave C should exceed the extreme of Wave A. 3. A trade beyond the extreme of the W.B signals an ABC correction is complete.





Chapter Two – Elliott Wave Analysis Module 5 – Complex Counter Trends

Complex Counter Trends A CCT is any correction other than a simple ABC counter trend. 1. The key factor to identify that the market is making a complex counter trend and not a new trend is if the sections "overlap." 2. Overlapping sections are always a pattern indication that a correction is probably being made and not a trend. 3. There is no definitive pattern guideline or rule that will signal a complex counter trend is complete. 4. In most cases, when the market exceeds the extreme of the last section, the complex counter trend is complete.





Chapter Two – Elliott Wave Analysis Module 6 – Subdivisions

Subdivisions of a Five Wave Trend 1. Waves 1, 3, and 5 of a 5W trend are the trend waves (move in the direction of the five wave trend). Each should subdivide into five waves. 2. Waves 2 and 4 of a 5W trend are counter trend waves (move against the direction of the five wave trend). Each should subdivide into 3W simple ABC or complex counter trend. ABC corrections are more common than complex corrections.

Subdivisions of a Three Wave Counter Trend 1. W.A of an ABC usually subdivides into five waves. 2. W.A may subdivide into three waves. If there is a 3W ABC that does not reach the typical WC price target zone, then it is probably an ABC-three wave, Wave A) 3. W.B of an ABC is a counter trend to the counter trend. W.B should subdivide into an ABC or complex counter trend. 4. W.C of an ABC should always subdivide into five waves.

Subdivisions of a Complex Counter Trend 1. Each section in the direction of the counter trend should subdivide into five waves. 2. Each section against the counter trend direction should subdivide into three or more waves. 3. The last section of a complex correction should subdivide into five waves.







Chapter Two – Elliott Wave Analysis Module 7 – Trend Reversal Pattern Signals

Five-Wave Trend Reversal Pattern Signal When the extreme W.4 high or low is taken out.

Simple ABC Trend Reversal Pattern Signal When the extreme W.B high or low is taken out.

Pattern Reversal Signals Are Identified In Advance Once the next to last section of a pattern (W.4 of a 5W trend or W.B of a 3W trend is identified) the Pattern Reversal Signal can be identified. The Pattern Reversal Signal is made when the W.4 or W.B extreme is taken out.





Chapter Two – Elliott Wave Analysis Module 8 – Elliott Wave and Multiple Time Frames

Multiple Time Frame (MTF) with E-Wave Trend Reversals If we can identify the smaller time frame subdivisions of the larger time frame sections, we should be able to identify the pattern reversal signal of the larger time frame much earlier than if we do not identify the smaller time frame subdivisions. Practical Elliott wave and multiple time frames can be an important part of a trading plan that help to identify trade opportunities and identify entry signals and stops with minimum capital exposure and high reward/risk ratio. MTF Pattern Reversal Signal For A Five Wave Trend Wave 5 of a 5-Wave Trend should divide into 5-Waves If the subdivisions of W.5 of a 5W trend are identified, what is the PRS of the smaller time frame subdivision that signals the larger time frame W.5 is complete? •

When the W.4:5 (wave four of five) extreme is taken out.

There will be less Capital Exposure with a trade entry at the W.4:5 entry than with a trade entry at the larger time frame W.4 entry.

MTF Pattern Reversal Signal For a Wave-C Wave C of a 3-Wave Counter Trend should divide into Five-Waves If the subdivisions of W.C of a 3-Wave trend are identified, what is the PRS of the smaller time frame subdivision that signals the larger time frame W.C is complete? •

When the W.4:C (wave four of C) extreme is taken out.

There will be less Capital Exposure with a trade entry at the W.4:C entry than with a trade entry at the larger time frame W.B entry.




Dynamic Trader Workshop – Chapter Three; Module 2 - Support Material – Page 1

Chapter Three – Dynamic Price Trade Strategies Module 2 – Retracements

Retracement Overview A retracement is a price movement in the opposite direction of the previous trend direction. There are two kinds of retracements, Internal and External. Most traders are familiar with internal retracements and the common Fib ratios. Most traders are not familiar with external retracements. You will learn some Fib related ratios in this course that are just as important but not used by many traders. Most highs and lows are made at or very near one of the price retracements. Retracements are an important part of identifying support, resistance, or trend reversal targets in advance.

Internal Retracements – Less Than 100% An internal retracement will always be a correction or counter-trend to the prior trend. It will retracement a part of the prior trend. Most common ratios for internal retracements - 38.2%, 50%, 61.8%, 78.6%

External Retracements – Greater than 100% An external retracement will always be a section that is part of the trend. Because it is greater than 100% of the section that is being retraced, an external retracement will represent a new high or low. Most common ratios for external retracements - 27%, 162%

You will learn in this course how to identify in advance which retracements are most likely to be support or resistance or trend reversal targets for any market, any market condition and any time period.



Internal Retracement Example – Less Than 100%

External Retracement Example – Greater Than 100%



Chapter Three – Dynamic Price Trade Strategies Module 3 – Alternate Price Projections

Alternate Price Projection Overview An Alternate Price Projection (APP) is the proportion of a past swing that moved in the same direction as the current trend. Trend swings are compared with prior trend swings and counter-trend swings compared with prior counter-trend swings. Retracements are used to help identify the support or resistance of a countertrend. Alternate Price Projections are used to help identify support or resistance targets in the direction of the trend. Highs and lows in the trend direction are usually made at or very near one of the Alternate Price Projections. APPs are an important price projection technique to help identify support or resistance and trend reversal targets in advance. APP Ratios used in the Dynamic Trading Method 38.2% 61.8% 100% 162% 262% The 38.2% and 262% APPs are only used for a few unique E-wave patterns which you will learn later in this chapter. Later in this chapter you will learn how to determine in advance which APPs are most likely to be support or resistance, or trend reversal targets for any market, any market condition and any time period.



Alternate Price Projection Examples



Chapter Three – Dynamic Price Trade Strategies Module 4 – Support and Resistance Target Zones

Support and Resistance Target Zones Overview S/R Target Zones are where at least one retracement and one alternate price projection are within a relatively narrow price range. Most highs and lows are made at or very near a S/R zone. To be able to identify S/R zones in advance is an important part of a trading plan.

S/R Zones Help Identify Minimum Profit Targets Trend Reversal Price Zones When to bring stops very close to the market

How to Identify A S/R Target Zone 1. Make the Int and/or Ext Retracements 2. Make the APPs 3. An S/R zone is a relatively narrow price range which should include one or more retracement and an APP.

If at a retracement and an APP are not grouped together, there is not a high probability S/R zone unless you are doing multiple time frame Ret and APP zones which you will learn later in this chapter. Dynamic Support/Resistance zones goes way beyond simple Fib retracements to identify key S/R and trend reversal for any market and any time frame. By using both retracements and alternate price projections, you are able to identify in advance which specific price levels have a high probable of support/resistance or trend reversal.



Support/Resistance Zone Examples



Chapter Three – Dynamic Price Trade Strategies Module 5 – End-of-Wave Price Target Zones

End-of-Wave (EOW) Target Zones Overview EOW price target zones are unique price projections that are made from the subdivisions of an E-wave pattern. EOW target zones make E-wave a much more practical for trade strategies. EOW target zones can only be made when there is the potential for a clearly defined E-wave pattern developing. When there is not, basic support/resistance zones are identified as described in the prior module. Each EOW target will include 1 or 2 primary EOW projections. The ideal EOW target zone will include 2 or 3 supporting projections that are near the primary projections. The EOW target zones are made as soon as a wave is confirmed complete. Then we are able to project the high-probability, EOW target(s) for the next section. The further along the pattern, the more individual price projections that are made because there are more completed swings in the pattern. The final wave in a pattern usually has the highest probability of completing the entire wave pattern and the narrowest EOW range since all of the subdivisions except the last are complete. Most EOW targets will have a minimum, typical and maximum target zone. The min, typical and max target zones are each identified by a primary projection plus secondary projections that are near the primary projection to form a relatively narrow range EOW target zone. Each EOW target zone has its own projections and ratios that are applicable for that particular EOW target zone. You will learn how to make each of the EOW projections in advance in this chapter.



End-of-Wave Price Target Zone Examples



Chapter Three – Dynamic Price Trade Strategies Module 6 – Multiple Time Frame Support and Resistance

Multiple Time Frames (MTF) Price Support/Resistance Overview Each approach to technical analysis including pattern, price and trend/momentum should use at least two time frames. Multiple time frames are sections (larger time frame) and subdivisions (smaller time frame) of a trend or counter trend that S/R zones are made from. When S/R price projections from a smaller time frame overlap or are very near the S/R price projections from the larger time frame A more narrow range S/R zone is usually formed. The MFT S/R zone has a higher probability of making S/R or trend reversal. A MTF S/R zone is where price retracements and APPs from more than one time frame fall within a relatively narrow range to create a MTF S/R zone. Multiple Time Frame S/R zones should identify a more narrow range of S/R zone with a higher probability of S/R and trend reversal than if just one time frame is used. More narrow range S/R target zones usually allow less capital exposure on trade entry and more net profit on trade exit.

How to make MTF S/R Zones Identify highs and lows of larger time frame to make retracements from. Make retracements from the larger time frame Identify highs and lows of smaller time frame to make retracements from and make the retracements. Identify highs and lows of two times frames to make the APP’s.

Identify MTF S/R zones A MTF S/R zone include either a retracement from two time fames and at least one APP from one time frame or a retracement from one time frame and an APP from two time frames.



Multiple Time Frames Support/Resistance Examples



Chapter Three – Dynamic Price Trade Strategies Module 7 – Multiple Time Frames End-of-Wave Target Zones

Multiple Time Frames (MTF) End-of-Wave Target Zones Overview Degree is the traditional E-wave term for the smaller and larger subdivisions of Ewave patterns. The subdivisions are a smaller “degree” of the larger “degree” section. In this workshop, we use the terms larger and smaller time frame to mean the same as larger and smaller degree. The subdivisions of an E-wave section are the smaller time frame of the larger time frame section. Multiple time frames EOW targets can only be made if the smaller time frame subdivisions can be identified.

How to make EOW MTF Target Zones The procedure is the same for any E-wave pattern and any market or time frame. 1. Identify the larger time frame of an E-wave pattern through the last completed section (such as through a W.4). 2. Make the EOW price targets of the larger time frame uncompleted section. (such as the EOW W.5 targets). 3. Identify the last completed subdivision of the last larger time frame completed section. (such as the W.4 of 5). 4. Make the EOW price targets of the smaller time frame uncompleted section (such as the EOW 5 of 5 targets). 5. Identify the relatively narrow price range where EOW targets from both time frames overlap. 6. If a larger and smaller time frame EOW target does not overlap, the emphasis is on the smaller time frame EOW target.

Benefits of MTF EOW Target Zones MTF EOW target zones usually produce more narrow range and higher probability EOW target zones. More narrow range EOW target zones usually allow less capital exposure on trade entry and more net profit on trade exit. The smaller time frame (subdivisions) EOW target zones usually identifies more narrow range EOW targets than the larger time frame alone is able. Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com


Multiple Time Frames End-of-Wave Target Zones


Dynamic Trader Workshop – Chapter Four; Module 2 - Support Material – Page 1

Chapter Four – Practical Indicator Strategies Module 2 – Characteristics of Indicators

Indicator Overview Most indicators represent the momentum of the price trend. In technical analysis, momentum is another word for Rate-of-Change. Most indicators represent the ROC or the speed of the price trend. Price and indicator values usually trend in the same direction but not always. The indicator may trend in the opposite direction of price which represents a slow down in the ROC or momentum of the price trend.

New Terms Overbought (OB): A relatively high indicator value. When the indicator is in a position for price to make a momentum high but not necessarily a price high. Oversold (OS): A relatively low indicator value. When the indicator is in a position for price to make a momentum low but not necessarily a price low.

Indicator Differences While almost all indicators are similar in that they represent the momentum of the price trend, they do display this information differently. Some of the differences between the indicators are The sensitivity they have to the momentum or ROC of the price trend. Whether they have a value limited to 100 or have unlimited values If they have a maximum values of 100, they will have overbought and oversold zones. Whether they reach an OB or OS zone at most momentum reversals Indicators with no maximum reading such as the MACD do not have OB and OS zones. An OB indicator signals the upside should be limited before a momentum or price reversal is made.

An OS indicator signals the downside in price should be relatively limited before a momentum or price reversal is made. An OB indicator signals the upside in price should be relatively limited before a momentum or price reversal is made. Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com


A momentum reversal may not coincide with a price reversal but the rate of price advance or decline should decrease following a momentum reversal. Once we understand what an indicator and its position represents, we will be able to use that indicator for practical and objective trade strategies. We will also be able to identify which indicators will be the most useful for Dynamic Trading trade strategies.





Chapter Four – Practical Indicator Strategies Module 3 – Indicator Settings

Indicator Settings Overview Most indicators represent the same thing – The momentum or ROC trend. The terms momentum and Rate-of-Change (ROC) are used interchangeably for trading purposes. The best indicator to use that will provide the clearest reversal signals is an indicator with two lines that cross on a momentum reversal. It could be an indicator with a fast and slow line or one with histogram bars and a signal line. The crossover of the two lines is the signal of the change of price momentum. The most useful indicators will oscillate from at or near the OB to OS zones with the momentum cycles.

Which Indicator To Use There is not one best indicator to use. What is important is the trader understands what the indicator represents. Study the indicator you use to learn how it reacts to price trends. The Stoc, RSI, MACD and DTosc are all good indicators to use.

Indicator Settings Indicator settings reflect the “lookback” period of the indicator. The lookback period is the number of bars counting back from the most recent bar that are used to calculate the indicator. The shorter the lookback period, the more sensitive to momentum changes. With a too short setting, the indicator will reverse every time the ROC slows down. The longer the lookback period, the more lag in the indicator reversal compared to the price reversal. With too long a lookback period, the indicator will usually make a reversal too many bars after price has made a reversal. The best settings are when price makes a reversal within 2-3 bars of the indicator reversal at a counter trend high or low. Choose different settings and note which setting most consistently makes reversals that coincide with price reversals at counter trend highs and lows. Settings are not the same for all markets or all time periods all of the time.



The settings may be changed if the momentum and volatility cycles change.

Indicators and Trend Price does not necessarily reverse trend with momentum reversals. A momentum reversal always represents a slowing down in the momentum of price but price may not actually reverse the direction of the trend is the momentum only slows down a modest amount. Indicators are most useful to help identify if price is in a position to complete a correction. Indicators are not as useful to help identify potential price extremes in the trend direction. Indicators often stay in the OB zone for a bull trend or OS zone for a bear trend for some time before an indicator or price reversal is made. The best indicator settings to identify the end of a counter trend are not necessarily the best to identify the end of the trend. Since we want to trade in the direction of the trend, we choose the best setting to help identify the end of the counter trend in order to enter the trade in the direction of the trend.

Indicators and Practical Trade Strategies Trades should be made in the direction of the price momentum. The trend of the indicator will help identify which side of the market to trade. The indicator will help to identify if a market is in a position to make a price high or low. A useful indicator is one that oscillates closely with price oscillations with few “false” signals. What ever indicator is used, it must have an objective reversal signal. You will learn more about indicator reversal signals later in this chapter. Most any indicator will be useful, as long as we are aware of how it acts and reacts to price trends, momentum and reversals. The proper indicator settings are important to accurately identify momentum and price reversals.









Chapter Four – Practical Indicator Strategies Module 4 – Indicator Bullish and Bearish Reversals

Indicator Bullish and Bearish Reversals Overview Indicator bullish and bearish reversals signal a momentum reversal and are used as part of objective trade entry, protective stop and trade exit strategies. Bullish Reversal Two line indicators (Stoc, RSI, DTosc) – when the fast line crosses above the slow line . An indicator bullish reversal represents a reversal to a relatively bullish momentum compared to the recent relatively bearish momentum. A bullish reversal may coincide with a price low or it may be a speed up in the positive ROC of an existing bull trend. Bearish Reversal Two line indicators (Stoc, RSI, DTosc) – when the fast line crosses below the slow line. An indicator bearish reversal represents a reversal to a relatively bearish momentum compared to the recent relatively bullish momentum. A bearish reversal may coincide with a price low or it may be a speed up in the negative ROC of an existing bear trend. An indicator bullish or bearish reversal must be a completely objective signal.

Practical Trading and Indicators Trades should be made in the direction of the price momentum. The trend of the indicator will help identify which side of the market to trade. The indicator will help to identify if a market is in a position to make a price high or low. For most indicators, it the proper settings have been chosen, if the indicator reaches the OB or OS zone, the upside or downside potential for price should be relatively limited. An indicator reversal will always represent a slowing down or speeding up of the momentum. It will usually represent a price reversal is near. A useful indicator is one that oscillates closely with price oscillations with few “false” signals. What ever indicator is used, it must have an objective reversal signal.



Trades are only considered in the direction of the indicator trend, unless the indicator is in the OB or OS zone. Bullish and bearish reversals are a key part of a trend reversal trade entry strategy. A trade is usually not entered in the trend direction until an indicator reversal to the trend direction is made. Bullish and bearish reversals are also used to adjust the stop-loss on an open trade. An indicator reversal against the trend direction may be a signal to adjust stops very close to the market. Later in this chapter, you will learn specific objective indicator trade strategies.





Chapter Four – Practical Indicator Strategies Module 5 – Indicators and Trend Reversals

Indicators and Trend Reversals Overview Most trend reversals occur near a projected support/resistance or EOW price target zone. However, there is usually more than one high probability S/R or EOW zone. The indicator position will help identify if a market is likely to make a reversal if it reaches a S/R or EOW. A price reversal is probable: If the indicator is in the OB or OS zone when price approaches a S/R or EOW target, or The indicator makes a reversal from any position after price reaches but does not exceed the zone. If the indicator is not in the OB or OS zone or has not made a reversal as price approaches the S/R or EOW target, more than likely a price reversal will not be made and the market will continue to the next S/R or EOW target.





Chapter Four – Practical Indicator Strategies Module 6 – Indicators and Trade Entry and Stop-Loss Strategies

Indicators and Trade Entry and Stop-Loss Strategies Overview The indicator trade strategies are applicable to any market and any time frame. Any trade strategy should consider the three main areas of technical analysis that is taught in this course which include pattern, price and trend/momentum. For this module, we are only going to consider the indicator position and not the potential price or pattern positions which are also typically considered when the trade is entered and the stop-loss is adjusted. All entry strategies should be objective. Once the conditions are in place to consider a trade, the entry price and initial stop-loss price should be completely objective. New Terms A 1 Bar High (1BH) is the high price of the most recently completed bar. A 1 Bar Low (1BL) is the low price of the most recently completed bar. Trailing 1BH (L): As a new bar is made, the 1BH (L) may be different. We will often adjust the entry or stop-loss to the trailing 1BH or 1BL. Trend Reversal Indicator Entry Strategy The indicator makes a bullish or bearish reversal. Entry is made one tick above (below) the trailing 1BH (L). Once the entry is elected, the initial stop is placed one tick above the high or low made prior to entry. Indicator Stop-Loss Adjustment Strategy The stop-loss is trailed close to the market when the indicator makes a reversal against the trade direction such as a bearish reversal in a bull trend. One strategy is to trail the stop-loss one tick above/below the 1BH (L) following the indicator reversal. The next module will describe how to use multiple time frames with indicators for this same strategy.







Chapter Four – Practical Indicator Strategies Module 6 – Indicators and Trade Entry and Stop-Loss Strategies

Indicators and Trade Entry and Stop-Loss Strategies Overview The indicator trade strategies are applicable to any market and any time frame. Any trade strategy should consider the three main areas of technical analysis that is taught in this course which include pattern, price and trend/momentum. For this module, we are only going to consider the indicator position and not the potential price or pattern positions which are also typically considered when the trade is entered and the stop-loss is adjusted. All entry strategies should be objective. Once the conditions are in place to consider a trade, the entry price and initial stop-loss price should be completely objective. New Terms A 1 Bar High (1BH) is the high price of the most recently completed bar. A 1 Bar Low (1BL) is the low price of the most recently completed bar. Trailing 1BH (L): As a new bar is made, the 1BH (L) may be different. We will often adjust the entry or stop-loss to the trailing 1BH or 1BL. Trend Reversal Indicator Entry Strategy The indicator makes a bullish or bearish reversal. Entry is made one tick above (below) the trailing 1BH (L). Once the entry is elected, the initial stop is placed one tick above the high or low made prior to entry. Indicator Stop-Loss Adjustment Strategy The stop-loss is trailed close to the market when the indicator makes a reversal against the trade direction such as a bearish reversal in a bull trend. One strategy is to trail the stop-loss one tick above/below the 1BH (L) following the indicator reversal. The next module will describe how to use multiple time frames with indicators for this same strategy.







Chapter Four – Practical Indicator Strategies Module 7 –Multiple Time Frame Indicator Strategies

Multiple Time Frames Indicator Strategies Overview Two time frame trade strategies may be used with any market and any two time frames. The trend/momentum conditions for trade entry are identified on the larger time frame. Trades are only taken in the direction of the larger time frame indicator unless it is in the OB or OS zones. If the larger time frame indicator is in the OB or OS zone, avoid initiating any new trades. Price may be near the end of the trend. Execute the trade on the smaller time frame indicator reversals. Using two time frames for entry and exit strategies should result in a higher percentage of profitable trades.



Chapter Five – Dynamic Trade Strategies Module 2 – Swing Entry Strategy

Swing Entry Strategy Overview Swing trade strategies may be used with any market and any time frame. The swing entry trade strategy may be used for both trend continuation and trend reversal trades. It is a simple but logical entry and initial stop-loss strategy. Once the conditions to enter the trade are identified, the entry price and initial stop-loss are objective. A key to this entry strategy is the market must be moving in the direction of the desired trade before an entry will be elected. A trade is entered when a swing high or low is exceeded in the direction of the trend. The initial stop-loss is placed just one tick beyond the swing high or low made prior to trade entry.





Chapter Five – Dynamic Trade Strategies Module 3 – Price Targets and Profit Objectives

Price Targets and Profit Objectives A trader should be able to identify a min profit target before entering a trade to be able to determine if the risk/reward is acceptable for a trade. The initial stop-loss which limits the initial capital exposure (Risk) is objectively defined at the trade entry. The minimum profit target (Reward) is more subjective and depends on the potential pattern position if one can be identified and potential S/R zones. There are minimum guidelines to consider when making a minimum price objective. The trader should be conservative in identifying the minimum potential profit target in order to have a realistic idea of the risk/reward for any trade. When there is no E-wave pattern to make an EOW price target, the min objective is where an APP is near a retracement which creates a price S/R zone. When there is an E-wave pattern when a min or typical EOW price can be made, the min objective is the min or typical EOW price target zone. Some EOW targets do not have both a min and typical EOW target.

Calculating The Minimum Profit Objective The profit objective is the difference between the min price target and the trade entry price. The profit objective is the Reward. The initial capital exposure (ICE) is the difference between the entry price and the initial stop loss. The ICE is the Risk. Trades should not be entered unless there is at least a 1:2 risk/reward. The risk/reward ratio is calculated by dividing the initial capital exposure (risk) by the min profit objective (reward).





Chapter Five – Dynamic Trade Strategies Module 4 – Trailing Stop-Loss Adjustment

Trailing Stop-Loss Adjustment Concepts There are two key concepts for stop-loss adjustment: Concept 1 As a market trends, the stop-loss price is that price that the market should not reach if the trend or counter trend is to continue. Concept 2 If a market reaches a position for a trend reversal, the stop-loss is trailed close to the current market position. Maximum Stop-Loss The maximum stop-loss price may be determined by the pattern, price or indicator position. Pattern Stop-Loss: Identify the pattern position and what pattern rule should not be violated. Price Stop-Loss: Identify the S/R and EOW targets which should not be exceeded if the trend is to continue. Indicator Stop-loss: Identify the higher time frame indicator position and the price high or low that coincided with the last bullish or bearish reversal. Stop-Loss Adjustment Targets Pattern Target: Is the market in the final subdivision of a pattern? If so, the stoploss should be adjusted no further away than one tick above/below the high/low of the last subdivision. Price Target: Is the market near a major S/R or EOW price target? If so, the stoploss should be adjusted to no further than one tick below/above the last minor swing high or low. Indicator Reversal: Is the larger time frame indicator in the OB or OS zone? If so, the stop-loss should be adjusted to no further than one tick below/above the low or high that coincided with the last bullish or bearish reversal of the smaller time frame indicator.



At least two of the three conditions should be in a position for a support/resistance or a trend reversal before the stop-loss is brought close to the market. Adjusting the stop-loss is not completely objective as is the entry and initial stop-loss placement. The trader must make a decision if the conditions are in place for support/resistance or trend reversal. However, the trader should be consistent in the approach to stop-loss adjustment even though it is not completely objective.





Chapter Five – Dynamic Trade Strategies Module 5 – Multiple Unit Trade Strategies

Multiple Unit Trade Strategies Overview A multiple unit trade strategy should increase net profits substantially over time. A multiple unit trade strategy should be used for any market and any time frame. The main concept for a multiple unit trade strategy is to assume the market will not do what you anticipate it to do so you look to exit a part of the position at the initial S/R. If a trend is anticipated, take profits on half the position at a counter trend price target in the event you are not correct about a trend. If a counter trend is anticipated, take profits on half the position at the min price target for the counter trend in the event the market does not reach a typical counter trend target. By taking profits on half the position at the min objective, at least a small profit is probable on the whole position if the trend does not develop as anticipated. The market may only make a minor counter trend instead of a trend as anticipated. By taking profits on part of the position at the counter trend price objective, at least a small profit is secured in the event the trend does not continue as anticipated.

Exiting Part of A Position If there is no E-wave pattern, the min price objective or first S/R zone is the target to take profits on half the position. Part of the position is exited at the min price objective. When the min price objective is met, the stop on ½ of the position should be trailed at the 1BHorL. The stop on the second part of the position is kept relatively far from the market until the typical trend or counter trend target is reached. The second part of the position is exited near the trend or counter trend objective. The trend objective may be a S/R zone or an EOW target or higher time frame indicator reversal. If the trend objective is reached, the stop on the second half of the position is trailed close to the market. Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com



Dynamic Trader Workshop – Trade Plan Strategies – Page 1

“If you fail to plan, you can plan to fail.” Every successful trader has a written trade plan. Most unsuccessful traders do not have a written trade plan. That is one reason why they do not make consistent and logical trade decisions. If you want to be a consistently successful trader, you will have a written trade plan. The trade plan does not have to include completely objective conditions before any trade is taken or exited. In fact, a “mechanical” system which gives buy and sell signals with no user input is a one way ticket to the poor house. Trading is like every other business in the world. The trader must learn to make decisions based on the information at hand. The trade plan should describe the guidelines for the conditions that are necessary before a trade is taken, the objective entry and initial stop strategy and the guidelines for the exit strategy. Below are two trade plans based on the Dynamic Trading approach. It should keep you on the right side of the market momentum and prepare you for the best trade conditions.



Trade Plan #1 With Exit Strategy at Minimum Price Target Part 1 – Trend Reversal Conditions For Trade Setup 1. Trade in the direction of the larger time frame indicator unless it is in the OB or OS zone. a. OK to go short on smaller time frame indicator bearish reversals if the higher time frame indicator is Bullish but OB. b. OK to go long on smaller time frame indicator bullish reversals if the higher time frame indicator is Bearish but OS. 2. Identify the probable pattern position. a. Is the market making a trend or a correction? b. What is the position of the market within the probable pattern? 3. Identify S/R or EOW price zones. 4. A trend reversal trade should be considered if at least two of the three trend/momentum, pattern and price factors are in a position for a trend reversal. Part 2 – Objective Trade Entry 1. Trail a buy/sell stop one tick above/below the 1BH following a smaller time frame indicator reversal. 2. Place the initial protective sell/buy stop no more than one tick below/above the low/high made prior to entry. Part 3 –Exit Strategy: ½ Position at Minimum Target 1. What is the minimum pattern anticipated to follow the trade entry? a. If there is a clearly defined E-wave pattern, what specific pattern should follow? b. If there is no clearly defined E-wave pattern, should a trend or counter trend pattern follow? 2. What is the minimum price target anticipated if correct about the trend and pattern position of the market? 3. What is the typical price target that should be reached if incorrect about the trend and pattern position of the market? 4. Trail the protective stop very close to the market on ½ of the position if the min price target for 2.a is reached. Copyright 2005, Dynamic Traders Group, Inc. – www.DynamicTraders.com


Part 4 – Exit Strategy: Second Half of the Position 1. If a clearly defined E-wave pattern develops, adjust the stop on the second half of the position no further than a pattern reversal signal. 2. If no E-wave pattern, only trail the stop close to the market if the higher time frame indicator reaches the OB or OS zone. a. Adjust the stop no further than one tick below/above the high or low made prior to a lower time frame reversal once the higher time frame reaches the OB or OS zone. b. If the higher time frame indicator is in the OB or OS zone and price is at a S/R target, trail the stop one tick above/below the 1BH or L following a smaller time frame indicator reversal.



Trade Plan #2 With Dual Time Frame Indicator Exit Strategy

Part 1 – Trade Entry Plan

5. Trade in the direction of the larger time frame indicator unless it is in the OB or OS zone. c. OK to go short on smaller time frame indicator bearish reversals if the higher time frame indicator is Bullish but OB. d. OK to go long on smaller time frame indicator bullish reversals if the higher time frame indicator is Bearish but OS. 6. Identify the probable pattern position. a. Is the market making a trend or a correction? b. What is the position of the market within the probable pattern? 7. Identify S/R or EOW price zones. 8. A trend reversal trade should be considered if at least two of the three trend/momentum, pattern and price factors are in a position for a trend reversal.

Part 2 – Objective Trade Entry 3. Trail a buy/sell stop one tick above/below the 1BH following a smaller time frame indicator reversal. 4. Place the initial protective sell/buy stop no more than one tick below/above the low/high made prior to entry.



Part 3 – Indicator Exit Strategy (Long trade example)

This exit strategy is completely objective. It does not consider the potential price or pattern position. It only considers the indicator position on two time frames to adjust the stop.

a. ½ Position: Trail the stop on the long position one tick below the 1BL following the first indicator bearish reversal after trade entry. b. ½ Position: As long as the higher time frame indicator is bullish but not in the OB zone, adjust the stop on the second half of the long position to one tick below the price low made prior to each smaller time frame indicator bullish reversal. c. If the higher time frame indicator makes a bearish reversal before reaching the OB zone, trail the sell-stop on the long position one tick below the 1BL following the next smaller time frame indicator bearish reversal. d. If the higher time frame indicator reaches the OB zone and the second half of the position is not stopped out, trail the stop one tick below the 1BL following a bearish reversal on the smaller time frame.


Dynamic Trader Workshop Summary

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