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<DIV><FONT face=Arial size=2>The directional system is a trend following method.
It was developed by J. WELLES WILDER, JR., in the mid 1970's and modified by
several analysts.It helps traders take chunks of profit out of the middle of
important trends.</FONT></DIV>
<DIV><FONT face=Arial size=2>Directional Movement is defined as the portion of
today's range that is outside of the previous day's range. The Directional
system checks whether today's range extends above or below the previous day's
range and averages that data over a period of time.</FONT></DIV>
<DIV><FONT face=Arial size=2>TRADING GUIDELINES :</FONT></DIV>
<DIV><FONT face=Arial size=2>1. When adx starts rising from below BOTH +d1 and
-d1 it signals the start of a new trend, buy if +d1 is above -d1. Sell short if
-d1 is above
+d1. </FONT></DIV>
<DIV><FONT face=Arial size=2>2.Major trends start when the adx line has been
under both +d1 and -d1.This indicates the market is flat. Stand aside. Don't
trade the entity that that you are getting this reading on. Go to another entity
that you trade and apply the adx to that entity until you have one that meets
rule 1 above.</FONT></DIV>
<DIV><FONT face=Arial size=2>3.This indicator works best on entities that are
very liquid and very volatile.Try to select and trade those.From personal
experience and observation I know you will catch the bulk of the
move.</FONT></DIV>
<DIV><FONT face=Arial size=2>4.When the adx line starts to rise from below both
+d1 and -d1 wait for it to rise three to five points from the lowest point it
achieved while it was under both +d1 and -d1e.g.8 to 12.</FONT></DIV>
<DIV><FONT face=Arial size=2>5.Entering the position is fairly easy. Exiting is
not. The official exit rule says that when the adx line goes above both +d1 and
-d1 it means the trend is overheated .When adx turns down from above both +d1
and -d1 it means current trend is fading. Take profits..</FONT></DIV>
<DIV><FONT face=Arial size=2>6.Mr. Wilder used 14 days as his time frame. I
believe the default time frame set in most computer's that have this indicator
is set at 14 days. I recommend leaving it at 14.but changing it to 30 min,
60 min for short term traders.This indicator works best when applied on daily
basis.It gives good longer term trends. We recently have been discussing Intel
on the board.A daily chart of Intel with this indicator under the chart shows a
sell signal on Intel on 9/5 It closed at 69.25 on 9/5.Today 9/27 it closed at
43.875.</FONT></DIV>
<DIV><FONT face=Arial size=2>7.As a general rule ,disregarding the adx line
itself, one should only trade from long side when +d1 is above -d1 and only from
the short side when -d1 is above +d1.</FONT></DIV>
<DIV><FONT face=Arial size=2>8.The revisions I made make entry and exit more
objective and closer to the actual turning points.Addionally, certain
configurations occur from time to time which translate into very short term( 1-2
days) buy or sell signals.</FONT></DIV>
<DIV><FONT face=Arial size=2>9.For stops, place a stop below the latest minor
low if long,and above latest minor high if short.Or stops of your
preference.</FONT></DIV>
<DIV><FONT face=Arial size=2>P. S. I am going to catch up on some paperwork and
trading. RT members are very interesting and knowledgeable.If a signal comes
along I will post it using all my indicators including the above one.In the
meantime happy trading to all.</FONT></DIV>
<DIV><FONT face=Arial size=2>Dom. </FONT></DIV>
<DIV> </DIV></BODY></HTML>
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