If anyone's still interested in this method, I downloaded the DAS Pro Demo (the front end for realfasttrader.com mentioned by the OP) and was able to duplicate the exact movements of the DAS Pro "DMI 15" indicator by creating a DYO indicator in Ensign Windows. In Ensign, and I suspect most apps, the actual setting for the PDI & MDI lines as seen in the DAS Pro software is based on a period of 8, not 15. This helps explain the extremely fast movements of the indicator. Also, as discovered back in 2003, the "ADX" line mentioned by the OP is actually a DX line. See the attached document which has screen prints that will allow you to recreate it in Ensign if you wish. You will need to create a DYO indicator, using the settings shown in the second screen print in the word doc. After playing around with it for several hours, I can tell you this much: On days where price trended nicely you could scalp 2-3 NQ points quite easily, assuming you stay away from the midday chop. However, on choppy, directionless days, it gets cut to pieces. At it's core, it's a momentum indicator, and like all indicators, it lags to a certain degree. You're usually buying when price is close to resistance, and selling when price is close to support. When price is trending, you're getting in on pullbacks, but usually right at the point when price is challenging its previous high/low. In a choppy market, this thing gives more headfakes than Kobe Bryant. Of course, if you can figure out the proper money management strategy, it wouldn't suprise me that you could make this a profitable strategy. I'm guessing the OP is successful with this strategy in part due to a hefty amount of screen time with this indicator, and has learned how to filter out the headfakes. He was also never explicit about his money management rules... the only thing he mentioned was bailing if the DMI lines crossed, but this seems to be a bit late, and seems to give you a larger average loss than your average gain on successful scalps. I hope someone finds this info useful. FWIW, I do not trade full time (yet... been studing of and on for a few years (lurking here for three), plan to study for a couple more while earing a salary), so take my observations with a grain of salt, because they don't come from someone who trades professionally. I'm encouraged that the OP is able to trade such a simple strategy successfully, but I doubt you could trade this thing out of the box without getting to know its nuances.
And I'm behind in my work now Seriously tho, did we determine the OP was using DX as opposed to ADX? Because when I look at intraday charts using ADX his method does not work consistently. In fact, there are many, many days in which the ADX line never raises above either of the other two lines. I was gonna post pics but it doesn't seem that he's use the ADX, anyway. However this thread has made me consider ADX right at the opening. I will have to look into that more.
Right. In summary, it is DX, not ADX that his software (DAS Pro) is plotting, and the period it is based off is an 8 period DMI, not 15. I find it amazing that the people who make the DAS Pro software would call it a 15 period ADX, when it's actually just an 8 period DX. I guess it makes it a "proprietary" indicator for them if no one can figure out how it performs its calculation. The more important question to me though, now having discovered how to plot the darn thing 4 years later, is how one could potentially use it to trade futures. The OP always talked about trading CSCO with it. I've looked at a few days worth of intraday charts for CSCO plotted with this indicator, and it definately gives a lot of good signals.... at least 4 or 5 nickel scalps a day. I wonder if somehow this indicator works best with CSCO or other equities that the OP is trading, but for some reason doesn't translate well to futures. I personally don't have any interest in daytrading stocks, but those who do may want to look at this closer (assuming they rely on indicators to trade). The first few signals of the day seem to work the best, probably because this is a momentum indicator and trading is more volitile in the AM. Also some good signals in the PM, but since the US markets tend to trend more in the afternoon (feel free to disagree), I don't think I would trade this counter-trend. So then the question to be asked is, if you're going to trade with the trend, why not just find a good way to time your entry in the pullback (ie earlier), instead of getting in right when price is testing S/R. In conclusion, the reasons I think this indicator worked for the OP are: 1. Several years of screen time with it 2. Seems to work well with CSCO 3. His targets are very small (.02 to .05) 4. He avoided the midday chop 5. He obviously has some of the intagibles that make a good trader. Even though I think there are probably better ways to trade, my hat goes off to him for having the courage and charity to share his profitable strategy on a public forum.
How we can combined DMI/ADX with the trend index indicator - a sort of MACD color coded oscillator. please clarify.
Please tell me what is to be construed if the ADX falls from 40 to 30 and bounces back to 40 or 45. thank you