When I developed Dynamic System, the idea was to exploit both large trends and ranging markets. It was therefore necessary to be offered sufficient precision to take advantage of these market environments. In ranging markets, the triggering levels tend to cluster over time, hence causing more frequent signals. They free up again once large trends are established such as during 2003-2009. Currently we are clearly in a ranging phase.

The scale basically goes from very long term to very short term. All of them have the same relevance for triggering an entry signal. You can also regard them as support & resistance areas. Let’s take the recent short signal (August 11th) for instance:

1. Price was nearing the mid-term triggering level 113.50 from below
2. Based on the bias color (bearish), clients know that it could signal a short
3. Price reverses nearby and our system gives an entry signal

These levels are not exact buying or selling recommendations. This is something that no system can tell in advance. Instead our system goes into detailed momentum analysis first by observing price action and the speed at which price moves. Once a reversal is observed there, it will enter a position and place the stop loss order accordingly.

Dynamic System generates a dozen or less signals per year to catch only the very big trends in which we stay in for weeks to months.

In the previous two years (since the inception of public trading signals) we lived up to our promise and clients enjoyed tremendous profits with few trades. 2008 offered merely five trades to make a 42% return, 2009 another 61% return with seven trades. In the current market environment we cannot stick with a trend as long as we used to.

You might have noticed that the market swings up only to reverse entirely. It is stuck in a range with the S&P 500 basically unchanged for the year. Not that our team wants to bloat with our 25% return for 2010 but when I conceived Dynamic System, I was aware that markets do not only trend. It is therefore optimized to exploit ranging markets with great efficiency, as well.

Our client base has been growing consistently with very low fluctuation. I am very thankful for the trust our clients give us. If you have any complaints, please do let me know. Although trend following still requires a bit of active money management, I’m sure it is absolutely worth the effort. So let us strive for a good second half 2010 and hope for more lasting trends to follow.

This is on top of our 42% we yielded thanks to its entry opportunities. Here are the specific trades we took last year:

Although Dynamic System has not signaled a new entry in 2010, yet, we remain patient. It is common for it to have several months of inactivity as its focus is on exploiting huge trends in the stock market. Trading opportunities are accordingly rare throughout the year. Therefore this trading system is best suited for passive traders and investors.

We want to thank all our readers, especially our clients and subscribers for your continued support. All the best for the upcoming year of the Tiger and may you and your loved ones stay healthy.

At the beginning of my career as a trader and fund manager I acknowledged that the market cannot be predicted and anyone doing so is either lying or a fortune teller. I do agree that it is predictable to a certain degree but we simply do not know for certain. Our protective shield as trend followers is the stop loss order. This order is more powerful than you think, as it is not only a measure to limit loss but also one for protecting profits. It makes trading objective and passive because you let the orders work for you. Gone are the days when you have to sit at the screen the whole day. This is not required if you follow long term trends.

As I’m writing this post, the German DAX is rising strongly, breaking an important resistance at 5750. I expect the U.S. market to follow suit today and make it very clear to any bearish investor that they are not going to be successful.

It is on the dice that trend following is good for your money. An objective and unbiased approach with strict risk management will make you sleep better at night. Dynamic System signaled an entry for the S&P 500 stock index back in July (viewable for subscribers only) and me and my clients are still holding this position.

Our system is up 20.91% on this trade as of today’s closing price. This is on top of the 30.29% we generated in the first half of 2009. We do not want to make any predictions but it definitely appears like the bull run has more to offer. Our time-tested risk management will get us out of this position with a profit even if the market should drop significantly. This is how straightforward trend following can be.

Trend following should not be missed in anyone’s portfolio, therefore subscribe and profit with us as soon as a new entry signal is published.