Although it's very generous of you keeping a real-time journal, i think you should reconsider whether this doesn't get in the way of your own trading to much, especially now you're trading for a living.
Hello, As an avid user of the ADX in multiple timeframes, it is my belif that you're misinterpreting the usage of it. While you may consider it, & are actually using it to measure trend longetivity, it has nothing to di with it. It's an indicator that measures trend strength, & readings of 25 aren't indicative of a trend losing strength. This need must be determined in the overall picture from where it has come, & from what type of price action precluded it's rise or fall. I will touch on this & my use & experience L8R, for now I will post a link. May it be of benefit. Besides this Chuck LeBeau has a very good & informative piece on it, I will try to locate it for you also. http://stockcharts.com/education/IndicatorAnalysis/indic_ADX.html Take Care & Good Trading! God Bless! Kelly
Kelly, You may want to go back and read through no_pm's previous journal. He explained his unconventional use of ADX and his reasons for it.
My thoughts exactly! As you are taking a very detailed approach to describe your methods, it's just as easy to summarize your trades during the day when/if things are quiet. Based on the effort you put into your previous thread on this subject , no one should question your intentions or credibility if your trades are not posted to the second. (At least I don't.) Good luck and good health!
WarEagle, Thanks for the info., & I'll check it out. I would be most curious as to how one adapts an indicator that's purpose isn't correlated to measuring longetivity, or more simply time. Trend length is a measurement in increments of time, unless I'm mistaken or missing something, or terribly out of the loop. That being known, it then becomes a matter of objectivity, or subjectivity does it not? Then in that adpatation is it really beneficial, or is it a psychological bias, or even a crutch? Thanks Again! Take Care & God Bless! Kelly
I'll have to agree with glass here. Age of trend and overextension of trend are not necessarily related, at least within the context of divergence. An ADX of 25 may relate both to "old" and "new" trends, but is hardly related to overextension.
Without speaking for no_pm, my take on it is that he is not looking for measuring the length of the trend per se, but rather that a trend is in effect (i.e. ADX > 30 or whatever), and it takes awhile for ADX to move above 30 once the trend starts, so in that regard it is now "established". The trade from the previous journal was predicated on the idea that for a divergence trade to occur, there must first be a trend to diverge with, that is all. If the move is not enough to pull ADX above the threshold, then the divergence signals will be more suspect.
"The ADX is used as a tool to measure longevity of the trend. If the ADX rises above 25 then I look for that as a area where the current direction is likely to stall." Apparently he's using the ADX differently this time. If so, he may want to re-examine his assumptions regarding what the ADX is and what it's supposed to do.