DMI/ADX consistently works

ow my head (and eyes)..!!!

i just read all 62 pages of this, and saw some of the screen shots. most of it makes sense, at least as far as "if you see this, you should likely do that"

i guess it depends on what stock it's used on, though. today i was watching (but not actively trading) using FAS / FAZ (financial ETFs). on the 1-minute charts it showed some good setups but also a lot of short-go-nowhere "trades". on the 5-minute chart is missed out on a number of smaller (yet still good) opps but did show one spectacular trade possibility.

so far, seems that a number of the DMI+ / DMI- crossover signals are pretty similar to "10-period MA crossing actual price"

would be nice to know what indicator EVERYONE is using. presumably people getting in would drive the price up (as the indicator expects them to do), making it a self-fulfilling prophecy of sorts. :)

my head hurts. my eyes hurt. but at least today my wallet didn't experience any pain (or pleasure).
 
A couple of other things to try with the ADX/DMI . You can try a shorter value for the ADX and a somewhat longer value for the DMI. Also, I've found that using tick charts rather than time based charts work pretty well, at least in the futures markets
 
I've been papertraded intraday with this method for the last couple of days, and what can I say, it's been doing very good so far.

I use stockcharts.com to display 1-minute charts with an 8-period ADX. The chart needs to be a linechart.

My buy signal is a bit different from what the OP has explained. But here it is; the DI- (red line) needs to have been above the ADX-line for some time. Now, my buy signal is when the DI+ line finally starts FALLING and drops below the ADX-line, which is increasing.

So in other words, the DI- line needs to DECREASE past the ADX line which is INCREASING. This produces very good signals, even in a weak downtrend its good for a pop.

I haven't developed a proper exit strategy yet, but I know for a fact that if you have this signal, the stock WILL GO UP shortly after.
 
Hi, I've read this thread through in an attempt to understand the DMI more, and have come upon some good findings after really trying to understand the OP's method. Since it was said what he was really using was the 8 period DX, I looked at this using the 8 period ADX chart on stockcharts.com and thinkorswim.

First, what is the visual difference between the DX line and ADX line? Can anyone post it? I've not been able to see via a search online, and the software I use of course doesn't have it.

My refined method uses the 4 period ADX line, with seemingly better results. It makes sense to use a faster period DMI study since it is noted to be slow and miss much of the trend. It helps if the underlying is trending and not real choppy, but setting really tight stops should help these stalemates.

With the 4 period DMI, the ADX line will rarely be below the DI+ and DI-. This is a good thing because the higher the ADX line the greater the underlying is trending.

The key is just to trade the DI+ and DI-, rather than waiting for the ADX line to cross them. Keeping in mind the OP had his colors backward from most common charting, on a 4 period DMI:

Buy when the green DI+ crosses up over the red DI-.
Sell when the red DI- crosses up over the green DI+.

One can try to maximize profits by picking a top on the green or red lines, rather than just mindlessly repeating the above steps.

The reason I picked the 4 period is it is the most sensitive without being overly so, which is seen in the attachment by the red DI- preserving its integrity in a gentle down slope. This /NG future on a 4 hour chart shows how easy this method would be on a nicely trending underlying.

Using other indicators should strengthen it, I plan to start papertrading it soon.
 
Yeah that's correct.

Btw, I've never been able to use DMI that well. With slower periods one gets in too late on a run, and with shorter periods one gets chopped up.

For range markets I like slow stochastics 14,6: it seems to really pinpoint tops and bottoms in ranging markets well.
 
How do you put on different settings for adx and for dmi?


Quote from futrstrdr:

A couple of other things to try with the ADX/DMI . You can try a shorter value for the ADX and a somewhat longer value for the DMI. Also, I've found that using tick charts rather than time based charts work pretty well, at least in the futures markets
More...
 
Hi all,

You are right, Navigatore, and I wonder if the fellow disagreeing has read the book first.

I just finished reading this thread. I have also read Dr Schaap's ADxcellence.

Dr Schaap and wife are the ADX specialists for the time being, IMHO.
Those interested in improving their ADX/DMI comprehension beware he is giving a webinar on 04 january 2012.

Yiehom



Quote from Navigatore:

Dr. Charles Schaap's book "ADXcellence" is the reference manual for ADX/DMI.
More...
 
You must log in or register to reply here.
Back
Top