A powerful concept for all timeframes…

Barky’s Diagonal Entry Model (DEM) is a trading strategy outlined by The Barkworthy Notes, designed to facilitate disciplined, emotion-free decision-making in financial markets. It is a core component of the Dynamic Trend Following (DTF) system, focusing on identifying and capitalising on trend continuation or continuation failure (reversals) using specific the 9-period Exponential Moving Average (EMA9) and repeatable price action patterns. The model employs a structured, rule-based approach to define entry points, manage risk, and lock in profits, making it accessible for traders seeking clear, repeatable setups.

Key Components of the Diagonal Entry Model

The DEM revolves around three distinct “diagonals” that guide the trading process:

1. First Diagonal: This identifies a break in the existing trend structure, signaling the start of a potential mean-reversal. For example, in an uptrend (higher highs and higher lows), a break below a key level indicates a shift toward a possible reversal.
2. Second Diagonal: This sets up a “risk-informed” entry point. After the trend break, the model looks for a price movement that confirms the reversal, such as a pullback into EMA9/14 to confirm expansion towards a significant level (e.g., support or resistance). This diagonal ensures the entry is timed to minimise risk.
3. Third Diagonal: This is the standardised target diagonal, where the trade aims to reach a predefined profit level. Upon hitting this target, 80% of the position is closed to lock in gains, and the stop-loss for the remaining 20% is moved to breakeven, allowing for potential further upside without risking losses.

Operational Mechanics

• EMA9 as the Focal Point: The DEM uses the EMA9 to identify trend direction and reversals. A trade setup begins when the EMA9 trend is tested (e.g., price breaks the EMA9 after a consolidation around the 50-period EMA, or EMA50). The EMA9 must lead the price post-entry, confirming the new trend.
• Trend Structure and Reversal: The model defines trends as sequences of higher highs/lower lows (uptrend) or lower lows/higher highs (downtrend). A reversal is confirmed when this structure breaks, often at key levels (support/resistance). The DEM excels in “level-to-level” trading, particularly when price reclaims a level after failed continuation (failure swings or failed breaks).
• Risk and Position Management: Each entry is risk-defined with a clear stop-loss placement. The model emphasises minimising losses and compounding gains. If a setup fails, the stop-loss limits downside. If successful, partial profit-taking and breakeven stops protect gains while allowing “runners” (remaining positions) to capture extended moves.
• EMA Dance and Stages: The DEM integrates with the broader DTF system, which includes stages like the EMA9 Reversal, EMA50 rejection, and sideways ranges (bases). These stages map price behaviour post-trend, guiding traders through consolidation and breakout phases using edges and the EMA9 to define risk.

Advantages of the Diagonal Entry Model

1. Simplicity and Clarity: The DEM is described as one of the simplest trading systems, requiring only the ability to identify three diagonals and follow predefined rules. This reduces complexity and decision fatigue.
2. Emotion-Free Trading: By automating decisions through clear criteria, the model helps traders bypass emotional pitfalls, preserving “emotional capital” during volatile sessions.
3. Risk Management: Precise stop-loss and position-sizing rules minimise losses, while partial profit-taking ensures gains are secured early, and compound.
4. Early Trend Entry: The DEM aims for the earliest possible entry into a mean-reversal, offering high reward-to-risk ratios when trends emerge.
5. Versatility: It works across various assets and timeframes, leveraging sector-based watchlists and live trading sessions to refine setups.

Practical Application

Traders using DEM monitor price action relative to the EMA9 and EMA50, looking for trend breaks and reversal setups. For instance, a long trade might trigger after price breaks below a support level (first diagonal), pulls back to retest it (second diagonal), and then pushes toward a resistance target (third diagonal). The model’s rules ensure disciplined execution, with live sessions via Discord and chart reviews available through The Barkworthy Notes’ Substack platform to support learning.

While effective, model requires strict adherence to rules, and relies on consistent discipline to succeed. The model and its parameters are explained in 7 Substack articles as a part of Barkworth’s trading course.

In summary, Barkworth’s Diagonal Entry Model is a streamlined, rule-based trading system that uses EMA-driven trend analysis and three diagonals to execute low-risk, high-reward trades. Its emphasis on simplicity, risk control, and early trend entries makes it a powerful tool for traders aiming to navigate markets systematically.