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Is the ADX indicator useful for you?
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Is the ADX indicator useful for you?

  #11 (permalink)
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never mind


Last edited by Sk8ter; February 1st, 2016 at 10:18 PM. Reason: found the indicator I was looking for
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  #12 (permalink)
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Tymbeline View Post
We all have our biases/perspectives, on the basis of our own experiences; one of mine is that "relying on an indicator" to decide when to enter trades is unlikely in itself to lead to any steady success.

Agreed. In the way of "magic bullets" to tell you something certain, I don't think there is one. Indicators have some use, but I've found that learning "price action" is a far more useful tool.

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  #13 (permalink)
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Yea learning price action is a great goal. Which book or course are you recommending? In the mean time I find indicators help me to see price just like the lines on the side of the pavement help me to drive. I totally agree it is getting pattern recognition down into memory. But I have been persuaded that a simple easy to read chart can have a few pet indicators. For example I like having Fat Tails Chande Knoll stop in a couple of very pale colors. Sort of like an Ichimoku cloud, only because Fat Tails coded it I call it the Berliner Folker.

I do think the price action advise is very good with indicators as well. You have to learn how it is going to react, none of this is digital and you really have to trade your own system. If you think DI or anything else is part of a magic bullet go read the first couple of chapters of Curtis Faiths book "Way of the Turtle".

Afterall, if this was easy we would all be as rich as the Turtles

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  #14 (permalink)
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vanzolini View Post
Hi,
I have tested some systems and trading strategies that rely on the ADX indicator, but none of them seem to work
Most of my testing was done looking to buy/sell in strong trends, as measured by ADX(14) > 20-30
Also tried to buy/sell when ADX was increasing (MyADX > MyADX[1])
I tried to buy pullbacks or breakouts in the direction of the trend
All the systems I tested failed to make money ...
Does anyone use ADX in a profitable way?
Thanks,

I used and studied ADX with Mean Renko for months.

I wasted my time all those months.

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  #15 (permalink)
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Trailer Guy View Post
In the mean time I find indicators help me to see price just like the lines on the side of the pavement help me to drive.

Isn't that like seeing the lines on the side of the road through a rear view mirror?

Math. A gateway drug to reality.
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  #16 (permalink)
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traderwerks View Post
Isn't that like seeing the lines on the side of the road through a rear view mirror?

Well gosh, there is no technical analysis that shows the future. All the indicators on this forum all assume that certain relationships in the past will continue in the future. Van Tharp is very clear that we only trade our belief of what the market may do, the reality is that we must assume the market is totally random. So it is more difficult than just driving forward looking in the rear view mirror. Van Tharp makes an other interesting point. If it was very easy to make a lot of money trading why do the institutions of Wall Street make it so easy for anyone to try, just like anyone can gamble in Las Vegas.

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  #17 (permalink)
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Trailer Guy View Post
the reality is that we must assume the market is totally random.

I don't assume that.

I look at it from the perspective of long-term probability: for example, if I find a regularly recurring pattern which produces winning trades 60% of the time and losers 40% of the time, over many thousands of trades, with equally-sized PT's and SL's, net of dealing-costs, I assume that the market isn't completely random. I don't think I'd be able to make a living, if the market were completely random.

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  #18 (permalink)
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Tymbeline View Post
I don't assume that.

I look at it from the perspective of long-term probability: for example, if I find a regularly recurring pattern which produces winning trades 60% of the time and losers 40% of the time, over many thousands of trades, with equally-sized PT's and SL's, net of dealing-costs, I assume that the market isn't completely random. I don't think I'd be able to make a living, if the market were completely random.

Yes, exactly Tharps point. Tharp think says you have to develop a system that gives you a statistical edge and you must trade your system. Thus you have to accept that the market will do anything after you open and accept that. A mistake is only when you don't follow your system. He is giving away his most recent book (Red Pill) in paperback if you pay the $5.00 shipping. While he spends a huge amount of time on psychology he does repeat his system quality and position sizing calc's. The guy has been training traders for 25 years so even if you do not agree with some of his stuff you would have to be pretty closed up and sure of yourself not to learn from him.

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  #19 (permalink)
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I should add where on CNBC or in the press do you read about spending thousands of hours to develop your own wining system, backtesting and then learning how to execute. It is always subscribe to our tip sheet and you will be rich in no time at all with absolutely no work on your part.

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  #20 (permalink)
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Trailer Guy View Post
Tharp think says you have to develop a system that gives you a statistical edge and you must trade your system. Thus you have to accept that the market will do anything after you open and accept that.

Certainly.

Nobody can predict the outcome of an individual trade with certainty.

Words like "prediction" and "random" cause problems, in forum conversations, mostly when people are using them with different meanings and frames of reference.

Fortunately, you don't need to be able to predict the outcome of an individual trade, to make a living: it's enough to be able to predict the collective outcomes of 1,000 similar trades with reasonable overall accuracy. And if you can do that, the market surely isn't "random".

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