Good (Saturday) morning all!!!
Now: 'Here ye, here ye'!!!
I'm having another one of those 'I'm just so excited I could sh*t' moments!!!
For those of you are 'hell bent' on only trading the RTS I THINK I've found a solution to ALL your problems (aside from recommending that you only trade the SIS, DMS, or VS that is)!!! (Sorry: that was a bit of 'tongue-in-cheek' there)!!!
OK: The way I see it using ADX to determine which system to be trading is letting you (us) down. It's unfortuanate and I don't know why this is (particularly as everything ELSE of 'the old mans' is working absolutely perfectly). I mean to say: either we're NOT understanding the use of ADX OR things have indeed 'changed' in the past thirty years or so as far as market movements are concerned. Either way: using ADX to determine whether or not to be using the RTS or TBPS is NOT working out I don't think and do you (we) have the time or the capital to necessary to work out 'why'? I know I don't!!!
Now:
I have attached two charts (YES they are both stock charts but it makes no difference I assure you). 'BK' is the daily chart of 'Bank Of New York' and it was because of THIS chart I've started having my reservations about ADX as a 'system selector'. Take a look at the chart and the ADX (both the 'smoothed' and the 'unsmoothed'). The way I see things: this stock has been traded in ranges for most of the period being displayed on the chart and IN SPITE OF THIS BOTH ADX's have for the most part had very high values. Obviously this is a problem because had I even ATTEMPTED to use any one of the trend following systems (which is exactly what both of the ADX's would be have been signalling) I would have had my 'a*se fed to me on a sliver platter'. AT VERY BEST CASE, using one of the trend following systems in 'the book', you would have only broken even on every single trade (ESPECIALLY using the SIS) (but OBVIOUSLY at this point I must re-iterate that the VS is excluded from this as it would not have been affected). Obviously at WORST case you would have taken a loss on each and every stop and reverse as indicated by the SIS.
Now for the 'magic bullet':
Take a look at the last indicator on the chart. It's the 'Vertical Horizontal Filter' developed by a chap called Adam White (I'd never HEARD of him until this morning). Anyway: take a look at see if YOU see what I see!!! I've taken the liberty of drawing red lines at the 0.25 level (for no other reason other than the fact that we have been looking for ADX values of below or above 25). Now YOU TELL ME: is it not VERY clear that when the VHF is below 25 the instrument is trading in a range and is it not VERY vlear that when the VHF is above 25 the instrument is starting to tred??? It's VERY clear to ME anyway!!!
Now just in case you think I've made this up: take a look at the link below (and if you want to know more just do a Google search using the words 'vhf adam white').
MarketScreen.com - Technical Analysis from A to Z
Personally: I believe this will breathe new 'life' and 'profitability' into ALL of the trading systems in 'the book'.
Now as I said before: I KNOW it's not 'Wilder' but unfortuantely we have to make use of whatever tools are made available to us to maximize profits and reduce risk and losses so to 'the old man': I DO apologize but I'm sure that you'll agree with me on this one!!!
(I included a chart of 'AMD' as well for comparison purposes i.e. AMD have traded in ranges and trended so you can see how this indicator works).
I HOPE THIS HELPS ya'll!!!
(Now there is NO excuse for the RTS and TBPS to NOT work for you OR ME)!!!
(By the way: the VHF indicator is under Delta's 'standard' list of indicators).