A LITTLE KNOWLEDGE ABOUT ADX

ADX uses the 25 benchmarks for comparison, specifically, if the ADX is higher than 25, the market is on a very clear trend. If the ADX is below 25, the market is struggling or there is no clear trend.

It's valuable information for us, but one more valuable information using ADX is SPEED. Again, the most important factor when dealing with ADX is SPEED.

To be more specific, if the ADX is above 25, if a good slope is, the trend will be strengthened.

One more use, if the ADX has not reached 25 but has appeared steep, the upcoming trend can be foreseen or in other words, it will predict that the trend (up / down) is about to form and be strengthened trying to increase to 25.

Conversely, if the slope of the ADX changes (less steep than that), it is an early signal that the trend has weakened, the uptrend is about to end and when it falls to 25, it is considered that the trend is over.

In short, the slope of the ADX is an outstanding feature to compensate for the lag behind the price for indicators.

The following will be some illustrations.

THE SPEED OF ADX PRESENT TRENDED MARKET


As illustrated above we will have the following strategies.

When ADX slopes up before 25, do you know that a downtrend has formed (not 100% sure, but there is a reason, but no instrument is 100% sure), you will prioritize Sell orders instead because of the Buy order. Of course, if you Sell in this zone, you will eat at the beginning of the trend.

You will move to a smaller time frame, and find an increased pullback to enter a SELL order.

We will close orders when the trend is weakened ie the slope is no longer the same, even a reversal. At that time, the reduction force is also exhausted, there is not much more reduction.

That is how a trader uses ADX to enter orders.

If you are not used to using ADX alone, you can integrate your system into, for example a Blade or MFI + MACD system, and use the ADX as an early indicator and a very good filter.

Here is an example:



You see, the MFI + MACD system has revealed its weakness, but it has been fixed by the ADX indicator.

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