Paul -
Thanks for bringing ADX up. This indicator has made a difference to my trading in the last 3-4 months, especially in this market. Some indicators, including oscillators, can go positive not because the stock is starting to move up, but merely because the stock has stopped a drastic move down. You buy in, and go sideways for a while, tieing up your money, and then finally either go up or down. Bad move... rate of return is the name of the game!
ADX, which is part of the DMI/ADX set of indicators, shows you the strength of the trend. If it's 25 and rising, it's a good trend, if dropping, the trend is breaking down (the stock is becoming trendless).
You can use it with DMI, or with other indicators. Adding it to my system rules boosted my rate of return by keeping me out of marginal trades.
Caveat - I use it with weekly data... I've really never tested it with daily data, so I don't know its effectiveness in shorter-term trading.
It's the only indicator of its type I've ever seen. Anyone know of another that measures strength of trend?
Loren |
