The Dance

Great work you've done here. Very detailed and educational. Thanks!
I am signing up and going to do some studying

I'm sorry, but previously I had not properly analyzed your scripts, and there are some errors ...
Here are the scripts which will hopefully work properly.
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Hi Clay,

Just a few questions on the trade entry rules. In your rules you state:

The 50 EMA with the 35 SMA moving averages determine the trend!
1. Look for longs ONLY when Price, is above the 50 EMA/ 35 SMA Lines.
1. 5 and 10 EMAs must also be above the 50 EMA/ 35 SMA Lines unless already in a
counter trend trade.
2. ONLY trade the “first touch” of the 10 EMA IF it is the SECOND bar in the retrace and you trade it EXACTLY at the “touch” with no more then 9 pips SL.

Ok, for rule 1, I read this as the 35 SMA does not need to be above the 50 EMA to trade a long position. I see many times where price is above the 35/50 but the MAs haven't crossed in the direction of the price movement at that time.

Now rule 2, just to clarify, do you mean that when price moves away for the 10 EMA and it retraces back to the 10 EMA that a trade can only be initiated if the retrace is only 2 bars in length and the second bar is the only bar to touch the 10 EMA.

Good observation ozziedave,
That explains then the last trade (trade 12) in the last page of the M15 Dance manual. That had 35 above 50 but price below both of them and a short trade was entered.

On the other hand, the H1 chart is used for defining the trend of the moment, so in that case the aforementioned trade would be short consistent with the 35 below 50 on the H1 chart. I guess Clay could elaborate on this.

Hi Clay,

Here is my first trade attempt with your system. I had a dead end candle the closed just below the 35 SMA with price making higher highs and higher lows. waited for the bullish candle to close and jumped in. Price went up to the next resistance area and I waited for the first bearish candle to close and exited with +35. Any comments would be appreciated.

Clay,

I am glad you posted the system, you have worked your ass off to get where you are. To everyone else this is a very simple system that takes some getting used to and requires a great deal of patience, for those that really put in the time to learn the system you will do well.

Hi Dave,

The 10 does not "have" to be above or below the 35/50 lines. IT is BEST if it is, but if you are in a "constrainment" area and entering, the 35 or the 50 may be used, just be careful and use a very tight SL. Normally if the 10 is also below them both, the trade is stronger and the "touch" then represents re-entering WITH the trend of the moment, EVEN THOUGH IT LOOKS like "catching a falling knife." Which scares a lot of people.

I never try to catch the falling knife, but I DO try to get back in with the move at the earliest possible point.

In regards to the image of the trade you took, you could trade that way, but your SL ends up being way too big for my tastes. I took your image and marked where I would have entered on the "first Touch" of the 35 and also where I would have moved my SL to on each bar. I would have gotten only about 25 pips, but where it would have taken me out you stayed in,,, good move, one could use the 10 EMA to stay "in" the trade longer I'm just a little more conservative and I use a little larger risk setting than most will be comfortable with.

This strategy is still a work in progress and I am still refining and condensing the manual so it becomes easier and easier to read and understand.

One thing about this strategy, is that it really is learning to "Dance" as the 35 and 50 "dance" around each other on the charts, with the 10 as well. As you work with it, you will begin to see other areas of entry which are also pretty strong, but for the introduction of the strategy, I wanted to narrow it to only three strong entries even a newbie could see and use very clearly.

I have attached a marked up version of your trade. As you can see, if you had entered where the "Touch" actually happened instead at COB of the next bar, THEN managed the trade the same way you did, you would have added quite a few pips to the trade. Actually more than I would have gotten.

I also marked another later trade where a "touch" resulted in a Pin bar. On that one, even with three bars I would have been tempted to take the "touch" as it also was the confluence of the 35, the 50 and a Round Number. My SL would have been spread + 2 or three at the most, just one pip below the RN. BUT, one could also have taken it at COB of the Pin and STILL had a SL of about 10 pips and done really well.

Hope this helps make things clear.

Hi Clay,

I can see why you would take the PB trade you have circled in blue but is there a reason you wouldn't have taken the PB trade I have highlighted in red? It's a touch trade at the 35. Just wondering

Hi Eclayf
Just finished reading your thread , Very good and smiple , Is this a vaild short sginal for your system?

Dave, you could have taken that Pin on post #28 (http://www.forexfactory.com/showpost.php?p=3540651&postcount=28) as an entry. The TWO reasons I would NOT have taken it are these. First, if the SL required to trading a Pin is to put the SL at the extreme of the Pin, which in this case means the SL would have needed the full 19 pips plus a few more to have a proper SL and the "upside" so close to a Round Number is "iffy" at best. The MORE important reason is that the 35/50 lines have already separated and are now moving mostly sideways. This almost always means less volume, narrowing price action and at this point in the session, we are late in the day, New York is close to or perhaps already closed, violating the rule of making sure that at least one major market of the pair is open at the time the trade is taken.

In short, you could have taken the trade without huge risks, but for a touch trade it is the THIRD bar, which means less confidence in the trade, the SL needed at COB is larger than I like, and the 35/50 lines are separated fairly widely and going sideways.

Tazzam72, the trade you highlight on post #29 (http://www.forexfactory.com/showpost.php?p=3540791&postcount=29) MIGHT be acceptable. You have NOT included the currency being examined in the image posted, or the time frame, so I can only assume it is the Eur/Jpy, but it doesn't look like the chart on my charts.

SO,,, the answer is that it appears to be acceptable as the 5/10 seems to be constraining price downward, but without being able to see the currency so I can look at the chart a little better I really can't say more. The main problem with it is that though the constrainment seem acceptable, your entry is also apparently amost dead on the S/R level from two previous attempts at price to go lower. Not sure I would have taken this one.

NOW,,, PLEASE, include IN THE IMAGE the currency being traded AND the time frame you are using. Look at my previous images posted and use that as an example. It will confuse people to see images of trades waaaaaaaay after they happen like this, and not be able to see which currency or the time frame.

I don't mean to be harsh, but I MUST require that for the sake of other traders. YOU know which one you are talking about, and the t/f and so forth, but other's won't.

From here on, if the image does not include in the screen shot the time frame, and the currency label at the top left of the charts, don't post them or I won't respond to them. I'll just ask management here for a clean up and for them to delete the post.

I AM looking forward to answering more questions. Please follow the rules to make my job easier and so others can follow the thread easier.

This is a re-run in the simulator of the trade posted earlier by ozziedave in post #25 (http://www.forexfactory.com/showpost.php?p=3540210&postcount=25) for clarification purposes only.

The "Touch Trade" is taken at the "Touch" NOT at COB, and the SL is automatically set to -19 by the script and the TP to 100. The SL needs to be moved as soon as possible to a minimal distance on a touch trade of no more than -11 or so as seen in the images below. Then the SL is "trailed" up at the bar extremes as seen.

When price approaches a S/R level from prior P/A or a Round Number, you need to watch it very closely. These trades quite often net out from 20 to 50 pips and many times as much as 90 or so.

The main issue in trading, as I see it is to take as near to perfect entries "by the rules" as possible, then let the rules protect you and give you the confidence to take the trades. Without that confidence, trading becomes a real struggle. The NEXT main issue is to learn to manage the trades the best way possible and never worry about taking your pips "too early." It is PERFECTLY acceptable to get out at +10 pips if that's all you can stomach at the moment, you will gain confidence from spending more time on the Simulator, and on live charts in demo. IT WILL become easier to see these and take them immediately without hesitation and that is the key to success in any strategy, not just this one.

The images posted below show what I am talking about. One could have managed this trade two ways, one is to exit when it hesitated at S/R on the second bar, then wait for another setup. Or, you could have allowed the trade to retrace almost totally against you and set the Sl just below the 50 EMA to allow for some variance in the next bar, expecting the 50 to act as Support, which is very often does. Then begin trailing the Stop until you get to the next S/R level and decide again to stay in or exit. That approach would have netted you around 70 pips or so.

To exit at S/R and re-enter at the 50 would have netted more, but requires more experience. And, yes, you could just take another position instead of exiting at the first S/R level and re-entering.

The strategy is flexible enough for you to find ways to really, make it you own as I talk of in the manual.

NOW,,,, THIS IS THE FORMAT I want the images posted in, NOT several bars later. That becomes confusing to many who just want to watch and read, as I did for over a year here.

YOU MUST include the Top above the chart so we see the currency being traded and the part below so we see the time frame as in these images. This is a fifteen minute chart strategy and it takes less than 30 seconds to take a screen shot and save it at the entry and the exit. NO EXCUSES guys, learn to do this or I'll have to be harsher about it.

Keep in mind these are off the Simulator and do not have the currency at the top left of the chart like normal.

Hope this helps.

By the way Dave, I didn't answer one of your questions. A "dead end" bar is one that "dead ends" INTO the moving average or Round Number, not away from it.

Also, Archie, thank you for the kind words. Hope the strategy helps you

Clay

Hi Kostas, sorry I missed answering this one. You are correct, this is NOT a moving average cross over system. IT IS a price action momentum system. That simply means we look for areas of key support and resistance that price respects in a very strong way and then we look for the overall momentum of the Trend OF the Moment to take our trades.

Hope that helps

I almost didn't take this trade as the 35/50 lines are nearly horizontal, but they are also literally "on top" of each other making it a pretty good signal in my book and completely "by the rules." SO I entered two positions, thinking to exit one if it hesitated too much early on and then move to BE,,, I knew I would get some sort of bounce, just not sure how much. The rest of the comments are on the charts.

Hope it helps.

First live trade,

Chart is Gbp/Usd, 15 min: Took long trade off 35/50 confluence (although the safest trade would have been three bars later) and exited at 4hr resistance. Good +52 pips!

P.S. Excuse the lack of first chart (i.e. with only entry and no exit).

P.S.2 I just realized that Clay had just posted the same chart above. His entry was much better in terms of risk and it is the third bar after my entry

Hi Kostas,,, would you explain how you are using the Dance strategy. The H4 is not part of the manual and it might confuse some. If you can explain it really well,,, no problems. If not, then don't talk about it so everyone can understand.

I assume that your trade was taken as a "clear break" trade of the 35/50 lines, but if so, that should have been at COB.

Seems to me you are taking some trades (which are good by the way) but using some of your personal experience (which is good) but it's not totally "by the rules" of the Dance.

This strategy can be extremely flexible,,, just be sure to explain what you are doing and why on the images you post please.

Thanks for the input to the thread.

Clay

Clay,
Nothing fancy. Everything by the DANCE book. I was just using 5min chart to fine tune the entry and I got in from a bounce of the 10/35/50 triple(!) confluence at the 5min (DANCE rules). After 45 min the price came back at -7 pips and that was your entry.

So, I survived that and I just had my final exit at a previous Resistance from the 4hr chart (the blue line at 1.50278 in my chart). The same number was also Resistance at the 1hr charts (5 bars terminated there). Therefore, it was an obvious target and I let the trade some room to breathe (SL following the 2nd older 15 min bar), especially around the 1.50000.

Regards,
Kostas

Interesting. I quit using the 5 EMA a while back and the M5 chart because I found myself focusing too much on the shorter time frame and it ended up costing me pips.

If you had followed the rules and trailed up your SL, you could have taken that same area of pips twice. That happens fairly often, though I have not started trying to take advantage of it yet.

Good trade Kostas.

Clay

There is a detail I would like to raise on the round numbers, 00 (I do not usually focus on the 50, but I'll check).

As stated in the Dance documents, part of the method is to take the re-tests of the 00 levels and S/R levels. In the charts you can see quite often a long wick of the candle rushing towards the level, surpassing it a bit, and then going back to the original point. This is the effect of the Stop Hunting of the Big Players. And this strategy takes advance of that Stop Hunting in the shape of the First Touch on the re-test of the 00. So it is worth checking if we are at say 30 level and check if the price suddenly goes down to the 00. Probably (very probably) it will go up again, mainly if we are in an uptrend. Reverse rationale for a downtrend.

For more information you can check in the following link:

http://www.investopedia.com/articles/forex/06/StopHunting.asp

which is a very good article on the topic.

Hope this helps in understanding a bit better one of the parts of the Dance method (though while writing I have the impression that I am writing a thing that everybody knows). Anyway, I wanted to share part of my (little) knowledge.

Happy Pips to all.

Gonso

It's all good gonso. Good information bears repeating often. Truly great salesmen go "back to the basics" at least once or twice a year in their training just to stay "grounded" in what works. Same goes in trading.

That is one of the core reasons I settled on the Dance as a strategy I will trade to perfection. It takes advantage of a lot of "self fulfilling" prophecies such as the psychology of "round numbers" and the stop hunting that goes on around them, as well as the amazing interplay between the 35 SMA and the 50 EMA.

Good info gonso. Appreciated.