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Philip,
I like the direction you're going with this. I haven't used ADX in my toolbox, so I
can't speak to it. But, this is the second reference to it that I've seen today
(the other was in an article I read this morning). I've been interested in it for a
short while, just too lazy <g> to learn something about it.
I'll be real interested to see what you get in the way of feedback.
Ken
Philip wrote:
> A remark by Chuck LeBeau about trading with the trend has stayed with me. He
> speaks of the actual strength of a trend as opposed to merely its direction.
> Entry strategies (pullbacks in his view) should be tailored to both direction
> and strength, he says. This makes perfect sense to me.
>
> Here are some initial thoughts. Perhaps you can help me to arrive at some kind
> of "hierarchy" of trendiness, or call it a classification, or a taxonomy,
> consisting of both direction and strength. For convenience, I'll describe only
> long trades.
>
> I. General direction, long term:
> EMA(21) > EMA(55)
>
> II. Trend picks up steam:
> EMA(13) > EMA(21) > EMA(55)
>
> III. Strong:
> EMA(8) >EMA(13) > EMA(21) > EMA(55)
>
> IV. Somewhere between II. and III. the ADX(13/14) usually starts rising. From
> what I've seen, a rising ADX at any level generally means business:
> ADX(13) > Ref(ADX(13),-1)
>
> V. Very strong trend: (this is where Linda Bradford's "Holy Grail" and such
> kick in)
> ADX(13) > Ref(ADX(13) and
> ADX(13) > 30
>
> Almost forgot:
> Very little direction (but don't fall asleep at the wheel):
> ADX(13) < say, 12-15 and has been bumbling along down there for a while (hard to
> quantify for me to date)
>
> Use a different method? Got a simpler way? Simpler, yeah, that sounds right!
> I look forward to hearing from you.
>
> Best regards,
> Philip
>
> P.S. I'll probably be cross posting some version of this to reach non-metastock
> users.
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