The 3 Musketeer Trade

The Most Effective ADX Strategy

Having to develop a most effective and efficient strategy to trade forex is not as easy as everybody thinks, haven't traded with a lot of strategy and end up burning all my margin in my account, i went to do a lot of research and back test on most strategy and i found out this superlative ADX Strategy, Ever since i have been using this i can predict what the next Candle will be in my trading.

This Strategy is best traded on the 15 Min Chart
So, i make use of only:

1. Pivot Points
2. Multiple 5,6 EMA (Exponetial Moving Average)
3. ADX (Average Directional Movement Index) Use to identify the trend

That all folks, the 3 Musketeer Trade.
I will let you know how i use the indicators in my next Post.

Jamiu.

I am always interested in ADX ideas. Looking forward to it.

I agree with you, developing a technical system for forex is not easy. I've been trading stocks for a while and I find that stock market is more technically driven. And besides, in stocks you only deal with a single instrument, like the stock of CSCO,INTC, etc. You buy/sell them using cash from your account. But in FX you always deal with a pair, so a direction of the pair is always influenced by both currencies not one (like in the stock market).

Anyway, good luck developing your system. I do not usually use ADX ( I mostly use MACD) but it has potential for giving good signals.


Cheers,
Steve

You mean, with 100% certainty every time? Day in and day out, month after month? Awesome!

what does multiple ma mean? you have multiple 5's and multiple 6's? or just a 5 and a 6 ema, or a 5 based on open close high and low and a 6 ema on high low close and open or what?

The 5, 6 EMA, Is 5 period moving averages, applied to open with color Red and 6 period moving averages, applied to close with color Yellow.
It Helps to Identify a change in trend and they are lagging indicator but i make use of it to signal a confirmation of a trend.
The ADX, is leading indicator, it tells signal a trend earlier than the moving averages, but it has fakeouts, that i why one need to wait for confirmation and a confluence of event from the moving averages. And using the pivot point as your profit taking area.
I will post the full ADX strategy soon, pls be on a lookout.
Jamiu.

Giving very nice counter trend signals, bravo!

Yo followers can also try to use SuperSignalsV2, SilverTrendSig, Fractals, ZigZag - theese indicators are cumulative, signal given by one of em mean nothing, but when 3 of are identifying peak, it's much more stronger signal.

But me dont want to overwrite yo' sistem - just 2c to see better how it may/have to work.

Thanks
&
Nice day!

I believe all of those are notorious for repainting, Supersignals v2 may not, I can't remember for sure.

That is idea - for all of em (expect fractals (painted 2 bars back), but in principle, it is the same)

Theese are indicators finding potential reverse of the trend!
That is why it is stronger to use them as cumulative ones!

I gotcha now

Also consult multiple TFs!
When trading M15, consult M30, before you decide to close trade - your behaviour however depends on what type of trader you suppose to be.
If you get in with multiple lots, you want to get out ASAP, with tight both SL and TP!

That might be all for quick brief I started here.

Thanks
&
Nice day!

thanks for clearing that up, look forward to hearing more from you

Looking forward to the system release!

hi

Is new to me that Adx gives early entry signals......but maybe a different use?

regards

lodol

Hello People first i want to introduce you the ADX before i tell you how i make use of it. It may be contrary to how other make use of this indicator but it very effective for me.
I need to let you know that ADX is trend indicator but unfortunately traders don't make use of it on daily trading, weekly or monthly basis.

The ADX (Average Directional movement Index) Indicator

The ADX is part of the direction movement system introduced by J.Welles Wilder in his book New Concepts in Technical Trading Systems. It comprises of the Directional Movement lines – the plus DMI line and the minus DMI line – and the ADX line (the Average Directional Movement Index)
ADX is created with reference to both positive and negative directional movement and identifying sustained movement in one direction. When this occurs ADX will rise (irrespective of whether the trend is higher or lower). Trend direction is identified by whether positive movement (DMI+) is above or below negative movement (DMI-). Once ADX rises above a certain level a trend can be said to have been established.
Although the average directional movement index (ADX) isn't used as frequently as some of the popular technical indicators the ADX line has definite advantages because it filters out a lot of the false oscillator signals which are frequently given early in a move.
A trader can stay with trending positions longer by following the simple guidelines for the ADX line. A climb by the ADX line above 40 followed by a downturn, signals an imminent end to the current trend (whether up or down).
The ADX is less helpful during sideways markets. During extended consolidation periods the ADX line will slip toward 10. When ADX approaches 10, a major move is usually about to take place. But the ADX line doesn't tell you which direction it will go. You have to rely on other indicators for the probable direction of the next move.

In short, if the market is trending, the ADX line should be rising. During an extended consolidation period the ADX line will slip toward a low number.
To sum it up –

1. When the ADX starts rising from a low level it signals the beginning of a trend.
2. The trend is confirmed when the ADX has risen above the 20-25 value and the +DMI line has crossed the –DMI line (in case of an uptrend)
3. When the ADX has reached an overbought level of 40-50 and starts consolidating or turning down it can signals the end of the current trend.
4. The decline of the ADX signals the consolidation or indecision of the market.

The optimum use of this indicator would be to consider trades only when the ADX has started to rise from a low level, as it indicates that a sideways basing pattern has been formed and trends usually emerge from extended sideways periods giving highly profitable trades.
he chart example shows how the ADX effectively indicates a range bound area and the breakout forming the subsequent trend.

http://www.tradeology.com/images/adx.GIF

Trading With The Trend - ADX Strategy


The currency markets are known to trend well. At the same time, catching a trend and staying with it, is not as easy as it seems.
Price always moves in wave motion, forming impulsive and corrective waves and many a times a major retracement could be interpreted as a reversal, only to see the trend continue.
The market saying of “trading the pullback” would fit this situation well.
Hence, if we can identify a strong trend and correctly interpret the corrective waves of the trend as a retracement, it would make trading more profitable.
With this in mind, we shall make a system that gives us the ability to trade pullbacks in the direction of the main trend by combining 2 technical indicators.

The advantage is that the unique characteristic of each, gives us the combined interpretation that we are looking for.
The first indicator is the ADX with the standard setting of 14. It is a trend indicator, which identifies a sustained movement in one direction. Once the ADX rises above a certain level a trend is said to have been established. You stay with trending positions longer, simply by observing that the ADX is not declining. An ADX reading of above 30 indicates that a strong trend is in place and we shall use this parameter for our strategy.
The second indicator is the Exponential moving average with a look back period of 21. The basic use of the EMA 21 is that it often acts as a dynamic barrier of support and resistance. In an uptrend price will remain above the 21EMA and more often than not, find support on the average in a continuing trend.
By combining these unique characteristics of the above two indicators we now define our parameters for the system. We will define a long trade and the same rules apply for a short trade by reversing the parameters.
Initially an ADX reading of above 30 is needed, which indicates that a strong trend is in place.
Once this parameter has been met and price retraces back to the 21 EMA we have a buy signal.
We enter the trade on the break of the high of this pullback bar, and place the stop below the low of the entry bar. The exit would be when prices cross the 21EMA down.

http://www.tradeology.com/images/adx2.GIF

And as we can see in the chart we have both long and short trades completed successfully. It is a very simple strategy with a high probability of success. Since we are going with the trend we are waiting for price to confirm our trades. The basic drawback is that it works only in trending markets and should not be used when price is range bound.
The ADX (Average Directional movement Index) Indicator

Pls Enjoy this introduction to ADX and i will post the use this indicator to my own advantage.
Good Luck and Happy trading....
Jamiu.

Is this the method you trade with?

Thanks for the information on ADX...very informative.

How will you use the 5/6 ma crossover with ADX to determine the next candles direction?

Thanks for the reply, is good that somebody appreciate the posting of the ADX strategy,
Well, i just make a little modification to my trading strategy to make my trading more clearer by adding another 21 EMA moving average, now am having 3 EMA on my chart 5,6 and 21 EMA. This make price direction more clearer. Thus i don't predict the candles with EMA, i only make use of to identify the trend, but where that power come in is behind the ADX, am current composing a book on the uses on ADX to my our advantage and how i use it to predict the next candle.
I will post the entire book on forex factory as soon as it done, pls do be on a look out.
Thanks.
Jamiu.

How about giving us the rules of your system.
If we have any questions, we'll wait for your book.
Thanks

hi jamiu....
what period do you use on your adx? 14?
thanks for sharing your system..... i'm waiting your ebook too...
thanks in advance....

Hello Again,
Thanks for the post and replies, well the rule to the system is simple; ALWAYS WAIT FOR CONFIRMATION from both ADX and the candle sticks pattern, I have alway love to say " Trading is not a race but how much pips you make and the worth of those pips, so don't just jump into trade without due confirmation from your indicators."
And Yes i use 14 period for the ADX setting.
Pls, be on a lookout for the book.
Thanks again.
Regards.