Good morning Sweet Pip,
Now that I come to think of it: THAT (‘grayhost’s’ thread) is where I heard of ‘ADXcellence’.
After my reading your post last night I ‘scoured’ the Internet looking for the book (I cannot tell a lie i.e. I was looking for a .PDF download of it). While I could not find one (well: not on a site that I trusted i.e. only recently have I had to reinstall my entire main workstation due to a virus and it’s not something I wish to have to do in a hurry again) I did manage to find some ‘snippets’ i.e. certain chapters that have been published on the Internet by the author as ‘teasers’. I don’t know what to say. As you know: I (we) spent more than a year ‘pushing and pulling’ ADX and in the chapters that I DID find last night I’m not seeing anything new or anything that we did not try. Perhaps in the ‘withheld’ chapters there are some ‘secret ADX techniques’ or ‘alternative interpretations’ of ADX but they’d have to be REAL ‘alternative’ for ME to justify paying almost $180 for the book when Wilder’s original only cost me $79!!! LOL!!!
The above being said: since my ‘fall from grace’ last year I’ve had no choice but to sit back and reassess myself and my trading systems and trading methodologies and it’s become blatantly clear that my spectacular ‘wipe-out’ had very little to do with Wilder or trading systems or trading methodologies and a LOT to do with me ‘getting ahead of myself’ and taking unnecessary risks so I cannot in all honesty say that ADX is NOT ‘worth its salt’. The very BIGGEST downfall of ADX (as with ALL trend following indicators) is what happens when the instrument being traded is NOT trending. WHO KNOWS? Maybe SOMEWHERE in ‘ADXellence’ this issue has been SATISFACTORILY addressed!!!
I suppose, to be honest, the BIGGEST difference between Wilder’s ADX calculation and the ‘other’ ADX calculations is the fact that Wilder uses his own ‘smoothing’ method (which can be quite easily simulated but for some or the other reason is ignored by most). We found that this made a HUGE difference when it came to eliminating ‘whipsaws’ i.e. a ‘NON Wilder smoothed’ ADX is very ‘choppy’. Of course: this is more of an issue if you’re trading Wilder’s DMS or ‘Directional Movement System’ (ADX is the indicator and the DMS is the system used to trade with ADX) i.e. it may NOT be such an issue if you’re using ADX purely as an indication of the direction of the trend and the strength of such trend (if there is a trend AT ALL). Of course there is then also the added issue of the ‘ideal’ period to be used (Wilder’s default is 14) and, of course, the temptation to ‘curve fit’ ADX by ‘messing’ with the period is ever present.
Notwithstanding the above: what we DID prove was that there were indeed periods when Wilder’s DMS was worth ABSOLUTE FORTUNES (2007 - 2008) BUT ‘tag’ the preceding periods (2004 - 2006) to these periods and you would have been very lucky to break even let alone make a profit in SPITE of the massive gains possible during the period 2007 - 2008 (we stopped testing at the end of 2008 so what’s happened in 2009 could quite possibly have contributed to an OVERALL profit for the period 2004 - 2009). Put another way: Wilder’s DMS OVER A VERY VERY LONG PERIOD OF TIME is, in all probability, highly profitable. The problem: NO trader that I know is going to stick with a system that consistently loses money for years in the HOPE that their ‘DMS ship’ is going to ‘come in’ one day.
As you probably know: I (ME) have relegated myself to trading breakout systems and (THOSE OTHER) ETF Trading Systems. Fortunately: there is NO subjective interpretation necessary with these systems unlike there is with a system such as Wilder’s DMS or an indicator such as ADX. There are probably as many different subjective interpretations of ADX itself as there are traders in the business!!!