DMI/ADX consistently works

Yuvrajjj · Jul 29, 2007

Quote from rcanfiel:

That it is 0-5 higher than when it started...
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it means the same trend has regained it's strength, right ?

thank you.

Abuelo · Aug 31, 2007

NYC- Hotshot .... Understand your beginning posts about your setup and use of ADX/DMI. But (yes there's always a "but") what action are you taking (and when) when you're in a trade and the ADX Line drops below either or both the PDI/NDI but the dominant DI retains that position.

Guess what I'm asking is while I understand how and when you decide to long or short, how do you make your exit decision?

Sorry if this has been covered before but if so I failed to see it after reading thru the posts.

Thanks.
Abuelo
ADX/DMI user

jficquette · Sep 1, 2007

I have played around with the DMI, ADX various ways. Here is the Tradestation code for taking the % of moves divided by total moves.

[LegacyColorValue = true];

inputs:
Length( 14),
ADXTrend( 25),
Smooth(1),
Overbought(.60),
Oversold(-.60);

variables:
oDMIPlus( 0 ),
oDMIMinus( 0 ),
oDMI( 0 ),
oADX( 0 ),
oADXR( 0 ),
oVolty( 0 ) ;

Value1 = DirMovement( H, L, C, Length, oDMIPlus, oDMIMinus, oDMI, oADX, oADXR,
oVolty ) ;

Plot1( (oDMIPlus-oDMIMinus)/(oDMIMinus+oDMIPlus), "Ratio" ) ;
Plot2(xaverage(plot1,smooth), "A");
Plot3(Overbought,"OB");
Plot4(oversold,"OS");

60% up or 60% down tends to give extremes.

The smoothing part is just to outline the indicator as a histogram.

John

snarlyjack · Sep 4, 2007

I read through this post a couple of times now through the years that I've been here. If you combine the DMI (8) with ADX (8)
with one of our favorite indicators the MACD Histogram (everyone seems to have their own favorite settings for the macd histogram).

These two indicators the ADX and the MACD Histogram seem to be nailing the moves.

I trade the (YM) futures market (mini dow) both long and short. These are the only two indicators that I use. And I am making a profit.

Hope this helps someone!!!

snarlyjack

TradEStar · Sep 4, 2007

Quote from snarlyjack:

I read through this post a couple of times now through the years that I've been here. If you combine the DMI (8) with ADX (8)
with one of our favorite indicators the MACD Histogram (everyone seems to have their own favorite settings for the macd histogram).

These two indicators the ADX and the MACD Histogram seem to be nailing the moves.

I trade the (YM) futures market (mini dow) both long and short. These are the only two indicators that I use. And I am making a profit.

Hope this helps someone!!!

snarlyjack
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Great Job...keep it simple is a smart approach!

I only use two indicators myself (MACD and STOCH...set at felton trading settings) and I find that on lower tick chart time frames I am getting excellent entries for scalping all day long.

sandygray66 · Sep 6, 2007

Quote from TradEStar:

Great Job...keep it simple is a smart approach!

I only use two indicators myself (MACD and STOCH...set at felton trading settings) and I find that on lower tick chart time frames I am getting excellent entries for scalping all day long.
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Hi TradEStar -

Just curious what size of tick charts you use (I assume for the ES).

Thanks.

Sandy

TradEStar · Sep 6, 2007

I use 89, 144, and 233 price change (or tick) charts for the ER2, ES, NQ, YM, or DAX...same charts for all these different contracts.

I also watch a three minute and a 15 minute in the background to watch the key s/r levels for the day.

Licatou · Dec 17, 2007

mikehbeck808:

I read your Ensign DYO for replacing NYC-HotShot ADX. It is very interesting that you finally discovered the truth of NYC-HotShot story. As I am not good for programming, do you have an idea on how to plot ADX and ADXR on the same subwindow in Ensign by using its DYO (I am an user of Ensign)?

Licatou · Dec 17, 2007

mikehbeck808:

I just tried to do with your attached DYO in Ensign. It did not show anything of DX on the screen. Did you try to repeat it in the newest version ?

Quint · Dec 20, 2007

Quote from dbphoenix:

God knows I don't want to get into another discussion over what constitutes "random entry". However, there are a few points in this that should be carefully thought over rather than accepted like bumper-stickers.

The outcome of every trade is dependent on the exit. If we enter in a timely fashion and then exit poorly, the trade is likely to be a loss. If our entry happens to be poor but our exit is good we might still salvage a profit. The exits, not the entries, determine the outcome of our trades.

On the fact of it, this seems like a "duh". But it is not. My primary quibble is the second sentence: "if we enter in a timely fashion and then exit poorly, the trade is likely to be a loss". Yes and no. If we enter in a timely fashion and then exit poorly, the trade may be more likely to be a loss than a profit, but a loss is not a lock.

This discussion hinges on the following: "the purpose of an entry is to get the trade started in the right direction". If the entry doesn't fulfill this purpose, the trade is less likely to be successful. If the entry is chosen without this purpose in mind, yes one can exit with only a small loss if the trade goes in the wrong direction. But the odds that such an exit will be necessary are less than if this purpose is made an important objective. To imply with the example of trading advice from Mars that one can make "random" entries and still be successful if the exits are good is to derail the piece from its more important points.

As I said, I don't want to get into another "discussion" of random entry. However, several traders may make certain assumptions regarding what this piece is all about depending upon whatever preconceived notions they may have about entries and exits. It is important, therefore, to be sensitive to seeming inconsistencies in the piece.
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Thank you for that piece!!