I simply replied to your question about Wilder's book. Many people don't seem to be able to do much with it. I'm happy you obviously "understood it" and can make it work, the better for you. My sole purpose was to point out to newbies that Wilder is no holy grail. He must have known himself as he went to 'greener pastures' to ply his trade. In this sense I think my "worthless" is justified. Again, no sweat, be happy with your ADX. nononsense
To backtest this trading system would be difficult. As long as you can define the strict criteria, which this system has, it is possible though. Then.... add multiple timeframes as confirmation and select the basket of instruments...further complicate this. Being that market direction effects 60-70% of the movement of a stock, this is an important consideration to your backtest also. The measurement of draw down compared with market drawdown might be a better statement to make and conclude with your backtest......there is no Holy Grail. Remember to correctly use the ADX/+DMI/-DMI is simply not to enter long when the blue line crosses up the red line. So I would be interested to discover your complicated, exhaustive backtest results....Your code must have been long....as the alternatives within the system are many.... Michael B.
One more point......intraday I would agree with you...This system is best used on bars that form an open and close price with a range of 1 day.....one day bars reflect sentiment and avg range/push better. Michael B.
I found that multidimensional adaptive recognition works much better. I must ask....what is this? Michael B.
"Didn't you know this is old hat? I assume you can't make money with it either." Not what I'd call a "simple reply". And pointing out that Wilder "is no holy grail" is not quite the same as claiming that it's worthless. And, fwiw, I don't use ADX. Have a nice day.
Ditch? Do you change your settings according to the wave/volatility characteristics of the instrument with blau's indicator? or does this indicator adjust to fit all without changing its setting(s) Michael B.
But of course ET is a traders site and this is not applicable to scalping and intraday trading. I use Futures for my speculative part of trading......as its a better use of leverage. Developed by Tushar Chande and Stanley Kroll, the Dynamic Momentum Index is quite similiar to Welles Wilder's Relative Strength Index. The differnce is the DMI uses variable time periods (from 3 to 30) vs. the RSI's fixed periods. The variability of the time periods used in the DMI is controlled by the recent volatility of prices. The more volatile the prices, the more sensitive the DMI is to price changes. During quiet market conditions the DMI will use more time periods while less are used during more active markets. As a result, the DMI is more sensitive to fluctuations in the market and displays changes more rapidly than the RSI can. Much like the RSI, Chande recommends using the DMI much the same as the RSI, with bearish conditions appearing at 70 or above and bullish conditions below 30. Remember, as the DMI is more sensitive to market dynamics, it often leads the RSI into overbought / oversold territories by one or two days.