I just always used them both together because I like to look for regular or hidden divergences like on the blogs. I also use the DI+/DI- crosses to signal a possible trend reversal and lastly if ADX is 20+ (and heading up) it signals a trend if present, if its 40+(and heading up) a strong trend is present and it shows on some of those big moves like the GBP/USD 200+ pipper yesterday . I haven't really used MACD histogram much so I can't really compair the two. I just like all the uses that ADX combines into one indicator, plus it's more colorful (RED/GREEN) DI lines that is. I guess it's just personal preferance which is what makes FX so awesome!!
Originally Posted by ramrocket
topgun, what advantages have you seen using adx instead of macd? do you confirm on d-/d+ crossing?
I use a similiar version of Elangs system only with ADX instead of MACD. I rather plot quick FIBO lines from the swing high/low which most charting software supports, than manually calculating Pivot Points and adding them to my charts. I haven't found PP's on Oanda which is another reason I don't use them
I have been following Elangs system and was using MACD. After reading this thread though, I studied your link you posted later on and read Elders system with using this indicator. I set my periods on the ADX to 10 to go with my (Elangs system) and back tested it. I was getting earlier readings of exits and reversals with higher profit taking than I was with the 5, 10 EMA crossover. I back tested it a little more and was very profitable with just using the ADX, and no other indicators. I am going to use ADX in place of MACD to confirm trends and still use the 5, 10 EMA and RSI break to exit because ADX causes you to constantly be entering and exiting. I was just wanting to know what you set your ADX too as in terms of periods because I read on your site you linked that the periods for ADX is not the same as EMA periods. Thank you for your time and any advice would be much appreciated.
Welcome aboard the ADX bandwagon . I just wanted to clear up that the link I gave is not my site, I just love how that site gives really good info & examples of ALL the indicators I ever wanted to know about, including Alexander Elders home brewed ones. When a site is good I have no problem recommending it. To answer your question, I have always used the default of 14 for my ADX settings.
Originally Posted by ahefner33
I was just wanting to know what you set your ADX too as in terms of periods because I read on your site you linked that the periods for ADX is not the same as EMA periods.