I have been comparing the Adx indicator to historical data and I find that on the daily timeframe it holds well to expectations. I want to ask: are there people who have strategies that are based on adx? is adx as reliable as I believe or am I just having tunnel vision syndrome?
Thanks
Some respected traders have used it so it does say something useful.
But the real measure of success of an indicator comes from how the individual trader uses it. Decide all the rules for your strategy to cover all eventualities, and back-test it. Then back-test it some more.
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I use the adx… I do not use the plus or minus lines of the ADX. I use the main line extremes when setting my levels/zones on monthly, weekly and deeley charts.
The ADX indicator is very good. It is very useful for measurements of a trend. You can even use adx with various periods like MACD indicator.
Are there any forex systems that are based on the adx? Hope someone gives a reply.
Yes, ADX is a reasonably good indicator of trend. But the strength of the trade will surely come from the trend? Surely a trader who needs an indicator to show if a trend is a trend is just not ready to use real money yet?
One of BP’s own promoted trading systems uses ADX as a filter but is not actually based on the ADX, but might be worth a read. The system is basically a 1-hour MA crossover with fixed TP/(trailing)SL.
I don’t comment on whether this system is worth adopting or not, but its results are published weekly.
I have also been exploring this same indicator as a filter in the same way with my own daily charts and am finding some value in its presence there - but I have not come to any definite conclusions yet worth talking about on BP.