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Directional Movement Indicator Strategy

  • #1
  • First Post: Edited Apr 1, 2009 8:27am Oct 9, 2008 10:01am | Edited Apr 1, 2009 8:27am
a cartwright
  • #2
  • Oct 10, 2008 9:15am Oct 10, 2008 9:15am
interesting... do you have stats of live performance?
  • #3
  • Oct 11, 2008 11:51pm Oct 11, 2008 11:51pm
ACartWright,

I have been using a similar strategy but ADX (10) instead of 14 and yes, it works consistently.
  • #4
  • Oct 12, 2008 1:48am Oct 12, 2008 1:48am
Quoting ACartwright
I have attached some screen shots so you can see the entries.

I have also put screen shots of when not to trade.

Let me know what you think

Alastair
Hi
13 DMI is used by some who adopt the '5 min Intraday System' form Philip Nel (and Golfer) Our timeframe is 5 min.

Er, I think you have forgotten to attach the screenshots.
  • #5
  • Oct 12, 2008 2:57am Oct 12, 2008 2:57am
I had posted the screenshots but they did not come out very clear so I took them off.

I think the DMI is often overlooked.

It works extremely well.
  • #6
  • Oct 12, 2008 2:58am Oct 12, 2008 2:58am
Quoting ACartwright
I have been playing around with every type of system for the last couple of years.

However one indicator I have not been able to get away from is Welles Wilders Directional Movement Indicator.

Firstly I know many people are going to say indicators lag - however if you can get on the right side of the trade the battle is almost half won - especially if you have been able to get to break even quickly.

Inspired by Chuck Le Beau's (this is my interpretation of Mr. Le Beaus work only - hopefully this satisfys copyright) teachings on the DMI I have devised a system that seems to work consistently.

I have combined a 14 period DMI with a standard 12,26,9 MACD.

The rules are as follows:

Buy

Buy when the following occurs.

1. +DMI is greater than the -DMI - Preferable to have the +DMI greater than a level of 20
2. The ADX has risen since the last bar
3. ADX is above -DMI but below +DMI
4. MACD agrees with the move - i.e. MACD is above signal line

Exit

1. Go to break even when 20 pips are made - this can be changed depending on pair
2. Exit when ADX starts to fall
3. Try to lock in profits when ADX becomes > than +DMI

Sell

Sell when the following occurs.

1. -DMI is greater than the +DMI - Preferable to have the -DMI greater than a level of 20
2. The ADX has risen since the last bar
3. ADX is above +DMI but below -DMI
4. MACD agrees with the move - i.e. MACD is above signal line

Exit

1. Go to break even when 20 pips are made - this can be changed depending on pair
2. Exit when ADX starts to fall
3. Try to lock in profits when ADX becomes > than -DMI

I have attached some screen shots so you can see the entries.

I have also put screen shots of when not to trade.

Let me know what you think

Alastair

I don't think you can copy right two standard setting an two standard tools
I think you will be alright

teb
  • #7
  • Oct 12, 2008 2:59am Oct 12, 2008 2:59am
Quoting jdcompute
ACartWright,

I have been using a similar strategy but ADX (10) instead of 14 and yes, it works consistently.
JD - do use the rules that I use?

And also have you come up with a good exit.

I believe when the ADX becomes greater than the dominant DMI you should look to take profits.
  • #8
  • Oct 12, 2008 3:02am Oct 12, 2008 3:02am
Can you post some screenshots with this system?Thanks!
  • #9
  • Oct 12, 2008 3:08am Oct 12, 2008 3:08am
Quoting ACartwright
I had posted the screenshots but they did not come out very clear so I took them off.

I think the DMI is often overlooked.

It works extremely well.
You can use Metatrader. File>Save as Picture on the menu bar, then you can save nice screenshots to post.

Hope it helps.
  • #10
  • Oct 12, 2008 3:11am Oct 12, 2008 3:11am
Quoting ACartwright
JD - do use the rules that I use?

And also have you come up with a good exit.

I believe when the ADX becomes greater than the dominant DMI you should look to take profits.
you normally look to get out when the ADX drops back under the 40
which you would need to add

teb
  • #11
  • Oct 12, 2008 3:14am Oct 12, 2008 3:14am
ADX base trading is a trending strategy, so is super laggy. but if you are a directional trader it should work.

Check this out:

http://www.earnforex.com/blog/2008/0...trategy-ebook/

enjoy.
  • #12
  • Oct 12, 2008 4:07am Oct 12, 2008 4:07am
Quoting lascavel
ADX base trading is a trending strategy, so is super laggy. but if you are a directional trader it should work.

Check this out:

http://www.earnforex.com/blog/2008/0...trategy-ebook/

enjoy.
I don't consider it laggy.

I would say as soon a sthe ADX rises there is enough momentum to get to break even normally on the next canle.

I will put up some screenshots tomorrow.
  • #13
  • Oct 12, 2008 1:15pm Oct 12, 2008 1:15pm
I haven't found it to be lagging really at all. I've traded using the stochastics for a couple of years now and find that ADX to be more of an accurate tool than the stochs.

Quoting lascavel
ADX base trading is a trending strategy, so is super laggy. but if you are a directional trader it should work.

Check this out:

http://www.earnforex.com/blog/2008/0...trategy-ebook/

enjoy.
  • #14
  • Oct 12, 2008 1:18pm Oct 12, 2008 1:18pm
I don't enter a trade unless ADX is above 30 and exit when the dominant DMI begins to drop AND the other DMI begins to rise. What I find often is that the dominant one will begin dropping but if you look at the lines, the other DMI signal is flat. When that one begins to curve up as the dominant one drops, I exit. Hard to explain, but hope you understand what I mean. I have to admit though, that I have no hard rules for exiting. Most of the time, I'll exit based on the fact that I feel that I've grabbed a good number of pips (+30 or +50) and then get out. But if ADX isn't above 30 to begin with, I don't even think of entering. The chart I uploaded shows where I entered and exited a trade on Friday.


Quoting ACartwright
JD - do use the rules that I use?

And also have you come up with a good exit.

I believe when the ADX becomes greater than the dominant DMI you should look to take profits.
Attached Image (click to enlarge)
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  • #15
  • Last Post: Oct 12, 2008 1:27pm Oct 12, 2008 1:27pm
TEB,

Glad to hear from you. I must say that I have been a follower of your threads for quite some time now and consider your advice and experience to be very welcome.


Quoting TEB63
you normally look to get out when the ADX drops back under the 40
which you would need to add

teb
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