The ADX (Average Directional Movement Indicator) is very good at determining trend strength. Used correctly with other indicators it can take a lot of false signals out of the picture.
but a book I read say ADX = trend chaser... not trend follower....
I use it in my system thou...
ADX like all indicators does lag. Used correctly with a few other indicators and it is very useful. It's not by any means a trend "chaser". It's actually very good at indicating when a trend is over, or when one "might" begin. 95% of traders fail . I'm willing to bet a good % of those traders don't know what a given indicator really means. I've read a lot of books. Your just looking at one persons opinion. If I had just read one book, and traded that way I would be broke.
EDIT: I read many books that said an RSI over 70 was over bought, and an RSI under 30 was over sold. If trading was that easy we would all be rich.
The ADX indicator is not going to give you more information then you can see for yourself on price it self.
If price moves up very nicely the ADX is going to go up. But I don't need an indicator to show me that because price itself showed that.
If price moves down very nicely then the ADX indicator is again going to move up. But again price itself showed that already.
Conclusion: if you would look ONLY to an ADX indicator you would see that it shows trend but even not the direction.
If you look to your price itself it would show you also the trend and even the direction.
My personall conclusion is that ADX is one of the most useless indicators around because if doesn't learn me anything more then what I can see on price itself.
adx pretty good filter; interestingly, you can also use cci values under +-50 as indication of directional movement
pict:adx & 2CCIs overlayed (or it can be wcci)
thanks for the info
how do you use it to determine breakouts?
People are followers or chasers - indi just a gage (lake gas, charge or other instruments in the car) - it show exactly what you told it to show - only a selected data at given moment...
I have been using metastock professional for 10 years and was a good programmer with it.
I have developped 100's of systems with it. Not that difficult because on this site alone you will find more then 100's compleet trading systems MetaStock™ Zone / Trader.Online.pl? . One had only to change some of the indicators or bring in his own ideas and had a new system. Copy paste it into MS and of you go backtesting and optimizing.
I have done many many test on systems with an ADX as a filter and that on at least 5 years data to backtest onand never I could find a result where the ADX proofed to be a reliable filter in this way that the false trades would have been filtered out and this way the overall positive hitrate got higher and the overall profit got higher over that whole period. On the contrary...
So I have a bit of a feeling that you jump very quickly to conclusions.
Looking to a particular TF and on one particular pair and over a short period of time is not a way to make conclusions.
A serious develloper knows that you can do only 1 thing with an ADX indicator and that is: never use it because the ADX it is LAGING BIG TIME on showing the difference between trend and consolidation. Laging in such a way that when it will show you consolidation it is already a long time consolidating so it will permit you to still take in trades in consolidation (allowing you taking in false trades) and laging in showing you trend when all indicators lined up to trade so it will filter out your entry (filtering out good trades).
If one says that an ADX looks good on a chart and is usefull in trading then for all the same he can place an standard MACD on a chart ans says it looks even better to trade from it in a reliable and consistent way.
Igor, where is Trading Systems in this site? MetaStock™ Zone / Trader.Online.pl?
together with indis through alphabet or somewhere separate?
thank you guys - under (inside) each letter - indis list, TS, EA, etc (bottom of the page)