|
PureBytes Links
Trading Reference Links
|
In a message dated 5/19/99 5:09:40 AM Pacific Daylight Time, chess@xxxxxxxxx
writes:
<< In trying to design a system one of the major problems that presents itself
is how to determine the character of the market you are trying to trade.
Obviously trending markets lend themselves to trend following systems and
trading markets require other systems. What is the best way to measure the
markets "trendiness"?
I have considered the ADX but that has problems with lag. What methods are
used by others?
>>
You can speed up the ADX by using any rise in the ADX as a trend signal
rather than waiting for the thresholds to be penetrated as recommended by
Wilder. The best (most timely) ADX signals come when it begins rising from a
low (below 15) level. As you have probably observed, the ADX is painfully
slow whenever there is a steep V shaped pattern.
I think you will find that there is always a trade off between the speed of
an indicator and its reliability. However by carefully plotting out your
pre-trade setups you can achieve both speed and accuracy under limited
conditions. For example RSI hooks are very fast but unreliable. However if
there is a strong trend you will find that the RSI hooks are both fast and
reliable.
Chuck
|