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Re: A "Hierarchy" of Trendiness



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Hi Philip,
A nice example of KISS. I just think that ADX / ADXR is way too slow to be of use if
you're trading short term.
Regards & Happy Trading,
Jan Willem

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.