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Hello Yarroll,
My personal opinion is that the ADX is unreliable whenever a stock suddenly
reverses direction. A rising ADX should indicate a trend in place but it
can be falling rapidly even though there is a new, possibly strong,
(reversed) trend.
I prefer to use the PDI and the MDI which are components of the ADX. I use
the following in addition to my exit signal for long trades or my entry
signal for short trades:
(Mov(PDI(7),3,E) < Mov(Ref(PDI(7),-1),3,E) AND
Mov(MDI(7),3,E) > Mov(Ref(MDI(7),-1),3,E))
The reason that I use a 3 EMA is that it will absorb any one-day reactions
during a trend. I have tried using the raw PDI and MDI but they generate
too many signals.
I find that the above responds far more quickly than the ADX to a trend
reversal although when composing an entry signal, you could add this for
good measure:
ADX(14) > 25.
No guarantees now ;-).
Regards,
Kevin
At 17:12 25/08/2003 +0200, you wrote:
>
>
>
>Hello List,
>
>Could someone remind me please what was the trouble with the way Metastock
>initializes ADX, ADXR? So as to make them unreliable for system testing?
>I seem to recall this was discussed here in the few past months (?) here.
>
>I never really paid attention to these two indicators, but have been looking
>lately and indeed it looks like a real problem. Whatever the other ADX
>values, it starts from either very low or very high values on the charts.
>
>Thanks. Best regards
>
>
>Yarroll
>***
>http://republika.pl/yarroll999/
>
>
>
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