[dpaterso]

Good (Sunday) morning all!!!

kaalilaatikko:

Again: well done and thank you for your hard work. And yes: you've answered all my questions beyond doubt!!!

HOWEVER folks:

Now that we're forced to revisit ADX/ADXR I've done a comparison between my 'unsmoothed' ADX/ADXR and kaalilaatikko's 'smoothed' ADX/ADXR and come up with what I perceive to be some very interesting results. (Before I continue let me say the I believe that the 'smoothed' ADX/ADXR is 'the way to go').I've attached a chart (that you have to download to view i.e. you'd not be able to see my markups clearly if I simply uploaded the chart).

What you'll find is this:

First instance:

Using the 'smoothed' ADX (which started here at 14.92) I'd have been looking to use the RTS for trades and needless to say I'd have lost money BIG TIME i.e. although the 'smoothed' ADX was telling me that the market was ranging it's quite obvious that is was not and had indeed broken out into a trend (down). The 'usmoothed' ADX IN THIS INSTANCE was giving the correct signal / value for a trend following system.

Second instance:

Using the 'smoothed' ADX (which started here at 31.78 BUT moved down to 17.38) at some point I'd have started using the RTS. Using the 'unsmoothed' ADX at no point would I have even considered using the RTS and would have gotten 'eaten alive' again. The 'smoothed' ADX IN THIS INSTANCE was 'closer to the mark'.

Third instance:

Using the 'unsmoothed' ADX (which started here at 32.07) I'd have been looking to use one of the trend following systems which, from what I can see, would have been the correct choice of systems to be used here. Using the 'smoothed' ADX (which started here at 17.38 but did eventually get to a value of 32.57) I'd have been looking to use the RTS and, again of course, this would have resuled in losses.

My conclusions are these:

First:

Don't get too happy in the thinking that the the 'smoothing' is going to 'miraculously transform' the profitability of the RTS. I don't see it happening (even although as I have said I believe that the 'smoothed' ADX of kaalilaatikko's is 'the way to go').

Second:

I now find myself thinking ONCE AGAIN that maybe we have to start 'playing around' with the period again e.g. using a 7 day period as opposed to the 14 day default period. The reason I say this is that just judging from my above observations it's really does appear (once again) that ADX is very slow to react in fast moving markets.

Third (and last):

What's interesting to note is that the VS would have got you into a short trade pretty early on in the downtrend (even before my 'first instance' as indicated) and you'd STILL BE IN THE SHORT TRADE right up until this past Friday with not a single stop and reverse!!!

Just to reiterate:

I'm by no means questioning kaalilaatikko's work here at all and I believe it to be correct. I AM INDEED now questioning the overall reliability of the ADX itself as it pertains to our markets and the use of the RTS. One 'curve ball' I'd like to 'throw into the mix here': as you are all fully aware I have the AO and AC on my charts all the time and I've noticed that when an instrument or pair is range bound the actual height (values) of the oscillators are reduced whereas when an instrument or pair is trending the actual height (values) of the oscillators increases. Could THIS be an 'ADX Backup' or 'ADX Confirmation'??? I'm not sure so take a look and see what you think.