|
PureBytes Links
Trading Reference Links
|
You still are using the properties of the adx for
buys - stops for exits. I suggest it's use is contingent on investor
sentiment..
the end,
Richard
<BLOCKQUOTE
>
>>More importantly, the average directional
movement indicators, in my understanding, are oscillators that hope to exploit
an observation that prices trend upward by closing strongly upward; i.e. the
sentiment of the trend is still strong and buyers are interested in the
stock. Your random/scrambled buyer has no concept of interest (or
trend for that matter) and this property should not exist in the data. I
suspect the inconsistent metrics of the synthetic results indicate this
missing information.>>
Actually, I don't use the ADX as an oscillator. I learned from Chuck
LeBeau that you can use the ADX both as a setup and a trigger for entering a
trade. The concept is the fact that as the ADX rises, it signifies a trend
(the relative position of the PDI and MDI determine the direction of the
trend). The higher the ADX, the stronger the trend. So, you wait until the ADX
actually falls into the teens (signifying a consolidation or trading range),
then upticks a fraction of a point (breakout). The uptick is the trigger to
enter. So, it doesn't matter what the past price history is or the interest of
the buying public. If the conditions are such that the prices are breaking out
of a consolidation, the trigger is activated. Again, that's why I contendyou
can use scrambled data to test how well your trigger works.
|