Merlin's ADX Education Primer ?

Somewhere - deep in the bowels of one of these threads - I read that Merlin spoke of an ADX or Moving Average strategy that gets him consistent results.

Anybody know the link to that thread ?

When using two moving average lines as a predictor of direction, does anybody have any advice on what TWO numbers (say a 3-day and a 9-day) and types (say simple or expodential) work best ? And on what chart periodcity? (5-min or 30-min, as an example)

ahh the adx...my favorite indicator! im not an indicator guy, but after reading Welles Wilder's book and finding out the adx calculation, i fell in love with it. i hardly use it as a primary indicator. my primary indicator is always price or volume. but the adx seems to work well as a filter for almost any system, especially on daily bars. when adx is low it means the market is choppy, when it is high it means the market is hell bent on a certain direction. you can imagine why it's a good MA filter.

I remember reading that Wilders said he used an additional filter for when there was a -DMI/+DMI cross. He said to wait for confirmation of a break above/below of the first bar after the cross before entering the trade.

I have seen one similar sounding system working ...

using a combination of ma 5 and 15 crossing.
then using dmi crossing + adx as a secondary indicator
also using macd crossing
all of them must cross within one time frame of each other.

and once that happens, you'd also want a 'price confirm' ie a close higher/lower on the next bar than the highest/lowest at the time when the signal came.

Its not too bad getting onto some of the 'breakouts' that occur.
it has some varying degree of success trading at US EST 6am - 10am thereabouts. Especially after the major announcements.

Oh, it works pretty well on 15min chart.. haven't look at it too much on the other time frames.

Ken

I use ADX with MACD, MACD is good in sideway markets. however there is many occasions when MACD shows clear divergence but trend do not reverses. So with MACD you should look at ADX. If Macd indicates divergence and ADX is still up above 25 so you should not enter the market. I use them together very successfully. As for time frame, I think best is 4hourly chart.

Merlin,

Do you have a previous thread as to your trading style and what you use?

thanks in advance.

thanks

A little something I found recently . . .

http://www.streetauthority.com/terms/w/welleswilder.asp