ADX and overnight gap

[robinxing]

I am a day trader

I use ADX as a filter to determinate the market type

but overnight gap will have a great impact on the ADX

I wanna eliminate the impact

is there any way ?

thank you

 

[efficiency]

Quote from robinxing:

I am a day trader

I use ADX as a filter to determinate the market type

but overnight gap will have a great impact on the ADX

I wanna eliminate the impact

is there any way ?

thank you

Ask any carpenter or mechanic about using the right tool for the right job. Since you used the phrase "overnight gap" one would assume you're not thinking in a day trading context.

As such, IF you're using ADX as Wilder intended, measured in DAYS, with a default of 14, a typical gap, less than 2.5%, would have have minimal impact. A is for average. Only slightly more at 9 days. Shorter than 9 days, an ADX is dubious.

Overnight gap would impact ATR. Provokes adjusting position size IF the gap holds. Ditto for mental stops.

Gaps vary. A big gap up could be construed as a break-a-way. IF long, I'd consider it a gift and book it. IF flat, not only would the gap have to hold but exceed the opening range (clearly the low made first) for me to entertain entry.