In my humble opinion, ADX sucks! Yes, I know all the "watch if it's increasing/decreasing, over/under 25/30 stuff". It just doesn't work very well for me. And please don't say VHF (it's even worse! So, I'm eager to hear other ideas...
ADX measures the strength of the trend. It does this quite reliably when the indicator is above 30 and has positive slope. If you see an ADX value of 40 or (rarely) 50 it is well worth your while to ride the trend, especially if you got in early. Be aware that ADX can exhibit divergence when the price is rising but the stock is being dumped.
try this: abs(close - average(close)/standard deviation(close) ie take the closing price and subtract from it the average closing price of x periods. Take the absolute value of this number and divide by the standard deviation of the closing price of x periods. The higher the number, the stronger the trend.
Zentrader, as I understand, ABS(C-MovingAvg(C))/STDEV(C,X), right? Then I have a question, the MovAvg can be used with a number of periods different than X right? Should it be greater than X? Less than X?
Hey does anyone have a mathematical formula that can be used as an indicator that is 100 % accurate. I need an indicator that works all the time nothing else will be acceptable in other words I need a Holy Grail system.
which of these are you using ADX for? if its for the intraday gap, news, spike day-trading (hence scalping), then the delayed (multi-period trendline predictor) will not be as accurate as desired. If its for a longer term, hence multi-multi-periods, then as a position trading indice, then it retains its worth. The absolute best indicator for intraday trading remains "brain power analysis". It takes time to train this AI (and for some of us, our inteligence is truly "artificial") to wave patterns that are profitable. However, part of the make-up are these indicators such as ADX. For example, take a 2min chart, 5min chart, 15min chart and 60min chart of the same security (irrespective of whatever it is), and then take a Tick chart (naturally this is less than 1min), depending on your processor and bandwidth speed, and you will see these patterns and do inteligent pattern recognition. Perhaps this will help, and also, perhaps this will prevent this method from becoming "neutralized" as other indicators obviously have been... Cheers
Fist of all there is no indicator that is worth watching. The truth is you need to understand the market what is happening and learn to react to it without hesation thats your best indicator. There is no short cut for experience or losing money to get anyone to understand discipline.
limitdown, good question, im trying to determine trend/range on an intraday timeframe. i agree with you that ADX works better on a longer-term time frames.