Why the E.A.S.Y. Method?

Mark Douglas, author of Trading in the Zone, states: The best traders have developed an edgeand more importantly, they trust their edge.

Why the E.A.S.Y. Method?

My trading edge rules:
1. A high probability of success. 2. Enter and exit trades without conflict or stress. 3. Trade decisions dictated by price action, not by my preconceived beliefs and opinions.

Developing the E.A.S.Y. Method

1. Does it really work at the moment of decision? 2. Does is have a high degree of probability and predictability? 3. Is it simple to use and follow, especially at times of critical trading decisions? 4. Does it yield more winners than losers?

What is E.A.S.Y.? E = Effective

Provides me an effective edge in my trading.

What is E.A.S.Y.? E = Effective A = Accurate

Delivers a high degree of probability and predictability.

What is E.A.S.Y.? E = Effective A = Accurate S = Simple

Keeps my analysis simple in order to get a quick snapshot of the market, and make trading decisions with less stress and anxiety.

What is E.A.S.Y.? E A S Y = = = = Effective Accurate Simple Yield

Yields a higher ratio of winning trades versus losing traders. Its a numbers game!

E.A.S.Y. Market Conditions

1. Price action 2. Momentum 3. Strength

E.A.S.Y. Chart Setup

Average Price Bars Price Action Channel Traders Dynamic Index

Average Price Bars

Average Price Bars

Provide a better depiction of current market trend at a glance. Reveal periods of consolidation. Show market strength. Eliminate fluctuations of nominal price action. Removes the noise of price distortion of the underlying trend.

Average Price Bars

Using the Heiken Ashi method Heiken means Average Ashi means Bar Heiken Ashi averaging technique
haClose = (Open + High + Low + Close) / 4 haOpen = (haOpen(previous bar) + haClose(previous bar))/2 haHigh = Maximum(High, haOpen) haLow = Minimum(Low,haOpen)

Typical Candlesticks

Typical Candlesticks

False exit points.

Average Price Bars

Average Price Bars

Average Price Bars

Positive bars mean BUY

Negative bars mean SELL

Average Price Bars

Positive bar with long upper wick means Strong BUY

Negative bar with long lower wick means Strong SELL

Average Price Bars

A positive bar with lower wick means Weak BUY

A negative bar with upper wick means Weak SELL

Average Price Bars

A very short bar means Change of Trend

Shorter bar than previous bar is an indication of Change

Price Action Channel

Traditional Price Channel

Two principal formats: 1. A pair of trend lines above and below price representing Support and Resistance levels. 2. An envelope of bands around price with set deviation limits such as Bollinger Bands, Keltner or Donchian Channels.

Traditional Price Channel

Used to determine upper and lower boundaries and signal potential reversal or breakout. Traditional price channels can cause reactive trading!

Price Action Channel

NOT a traditional price channel. Does not set outside of price in wait for the market. It resides inside price movement. Used by institutional traders and sophisticated trading programs. Promotes responsive trading!

Price Action Channel

Provides overall trend direction. Reveals periods of consolidation. Used primarily as an Entry target. BUY Trend Average Price Bars tend to run on top of channel. SELL Trend Average Price Bars tend to run on bottom of channel.

Price Action Channel

Use Smoothed Moving Average Top of Channel = 5 period, High Bottom of Channel = 5 period, Low

Price Action Channel

Good BUY (Long) Trend
Positive bars riding the top of the Price Action Channel

Nice upward trend of the Price Action Channel.

Price Action Channel

Good SELL (Short) Trend
Nice downward trend of the Price Action Channel.

Negative bars riding the bottom of the Price Action Channel

Price Action Channel

Range-Bound, No Trend
Price Action Channel is flat with no clear direction.

Traders Dynamic Index

Traders Dynamic Index

A hybrid indicator developed to indicate market conditions related to trend direction, momentum, and market volatility.

An all-in-one indicator!

Traders Dynamic Index

Step 1: RSI Price Line

Rules: Trade Long when RSI PL is above 50. Trade Short when RSI PL is below 50. Consider exit when RSI PL is > 68 or < 32.

Traders Dynamic Index

RSI Price Line compared to Price Action

Traders Dynamic Index

Step 2: Trade Signal Line

Rules: Trade Long when RSI PL > TSL. Trade Short when RSI PL < TSL. Exit trade when RSI PL & TSL crossover.

Traders Dynamic Index

Step 2: RSI PL & TSL Combined

Traders Dynamic Index

Step 3: Market Base Line

Rules: Market Base Line acts as Overall Trend. Trade Long when RSI PL is > MBL. Trade Short when RSI PL is < MBL.

Traders Dynamic Index

Market Base Line compared to Price Action

Traders Dynamic Index

Market Base Line forecasts Market Reversals

Traders Dynamic Index

Step 4: Volatility Bands

Rules: Add to a Long trade when RSI PL is > VB. Add to a Short trade when RSI PL is < VB. Consider exit when RSI PL crosses back over VB.

Traders Dynamic Index

Volatility Bands compared to Daily Price Action

Traders Dynamic Index

Volatility Bands compared to Intraday Price Action

Traders Dynamic Index

Adjusting RSI MA & Volatility Band for Global Perspective

RSI PL & TSL combined with Volatility Band

E.A.S.Y. Method
Putting it all together!

Average Price Bars

- Heiken Ashi indicator

Price Action Channel

- 2 Smoothed Moving Averages - 5 period, High - 5 period, Low

Traders Dynamic Index

RSI = 13 period, Close Volatility Band = 34 period, Close RSI Price Line = 2 period, Close, SMA Trade Signal Line = 7 period, Close, SMA

E.A.S.Y. Method Entry Rules

E.A.S.Y. Method
All systems GO!

Average Price Bars (APB)

Look for Positive or Negative bars trending. Monitor the current haClose. BUY signal Positive bar making long upper wick. SELL signal Negative bar making long lower wick. Long entry haClose > PAC High Moving Average Short entry haClose < PAC Low Moving Average

E.A.S.Y. Method
All systems GO!

Price Action Channel (PAC)

Monitor the direction of the Channel. Buy signal Channel trending up. Sell signal Channel trending down. Monitor the High & Low Channel values in relation to the current haClose. Long entry haClose > PAC High & PAC uptrend Short entry haClose < PAC Low & PAC downtrend

E.A.S.Y. Method
All systems GO!

Traders Dynamic Index (TDI)

Long entry = RSI PL > 50, TSL, and MBL. Consider adding to Long trade if RSI PL > the upper Volatility Band and > 50, but < 68. Avoid entering a Long trade when RSI PL > the upper Volatility Band, > 50, and > 68.

E.A.S.Y. Method
All systems GO!

Traders Dynamic Index (TDI)

Short entry = RSI PL < 50, TSL, and MBL. Consider adding to Short trade if RSI PL < the lower Volatility Band and < 50, but > 68. Avoid entering a Short trade when RSI PL < the lower Volatility Band, < 50, and < 68.

E.A.S.Y. Method Entry Setups

Long Entry: (All conditions are satisfied.)
1. APB haClose > PAC High Moving Average. 2. PAC trending up. 3. TDI = RSI PL > 50, TSL, and MBL.

Short Entry: (All conditions are satisfied.)

1. APB haClose < PAC Low Moving Average. 2. PAC trending down. 3. TDI = RSI PL < 50, TSL, and MBL.

E.A.S.Y. Method Exit Rules

E.A.S.Y. Method
Time to Exit the money train!

APB Long exit

Positive bar is much shorter than the previous bar or changes to a negative bar at close.

PAC Long exit

APB closes inside the channel.

TDI Long exit =

1. RSI PL crosses back below the TSL to the downside.
2. RSI PL > 68. 3. RSI PL crosses back below the upper Volatility Band to the upside.

E.A.S.Y. Method
Time to Exit the money train!

APB Short exit

Negative bar is much shorter than the previous bar or changes to a positive bar at close.

PAC Short exit

APB closes inside the channel.

TDI Short exit

1. RSI PL crosses back over the TSL to the upside. 2. RSI PL < 32. 3. RSI PL crosses back up over the lower Volatility Band.