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CRLeBeau@xxxxxxx wrote:
>
>
> No system can avoid all losses. The ADX rising would mean that you > should
> not be trading counter-trend. Could be a loss or two in the meantime.
> Better have good exits and risk control (but that advice would apply to > any
> methodology).
>
> If you need speed, there must be methods of defining trends other than > the
> ADX. (It just happens to be my favorite.)
Since ADX uses 3 MAs (the daily- (or whatever)- directional indicators
(+ and - DI)are averaged first, then their spread is averaged,there is a
lot of lag that accumulates on top of lag. Using lower lag MAs might
improve performance, as might using a shorter MA in the final smoothing
of the spread, e.g, using 13 periods in the + and -DI smoothing, then
using 9 periods in the ADX.
Perhaps the element of assigning a value of 0 to inside and outside bars
whose highs and lows are equidistant to the prvious high and low, could
be made dynamic instead of static, based upon data concerning the inside
or outside bar. That could be any data you choose, such as consideration
of price pattern, volume, whatever. Then sometimes you would have a
value of "1" or "-1," for instance, for daily directional movement
(prior to averaging) instead of a zero. But that's a side thought...and
it's probably not very often the Directional System places a value of
zero on the daily (or whatever) DI anyway. But values other than zero
could be replaced, based on the same considerations.
Overall I think the way to speed up the ADX is to use lower lag averages
in it. Other than that, you're pretty much building a new indicator.
Monte
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