This goes with my MrBS:DMI+ indicator. I originally combined them into one, but then you cannot set alerts based on what the ADX and DMI is doing, only strategy alerts, so separate ones have more flexibility and uses. Indicator Version is found under "MrBS:Directional Movement Index [Trend Friend]" (uk.tradingview.com/script/EmnHZno9-MrBS-Directional-Movement-Index-Trend-Friend/)
//// THE IDEA
The majority of profits made in the market come from trending markets. Of course there are strategies that would say otherwise but for the majority of people, THE TREND IS YOUR FRIEND (until the end). The idea is to follow the trend, entering once it has established its self and exiting positions when the trend weakens. This strategy gives a rough idea of the returns produced from following purely the ADX signals. At first Heikin Ashi values were used for the calculation but the results show it's not that effective. The functionality to switch between calculation types has been left in, so we can uses HA candle data to generate signals from while looking at an OHLC chart, if we want to experiment. Due to the way strategies work, we are unable to get reliable results when running the strategy on the HA chart even if we are calculating the signals from the real OHLC values. It is best to always run strategies on standard charts.
When using this strategy, I look for confirmation of the signal based on stochastic (14:3:6) direction, reversal level of stochastic, and divergance, to add confidence and adjust position size accordingly. I am going to try and code some version of that in future updates, if anyone can help or has suggestions please drop me a message.
//// INDICATOR DETAILS
- The default settings are for optimized Daily charts, for 4 hour I would suggest a smoothing of 2. - The default values used for calculation are the Real OHLC, we can change this to Heikin Ashi in the menu. - The strategy enters a position when ADX crosses the threshold level, and closes the position when ADX starts to fall. - There is a signal filter in the form of a 377 period Hull Moving Average, which the price must be above or bellow for long and short positions respectively. - The strategy closes the position when a cross-under of the ADX and its 4 period EMA. This is an attempt to stay into positions longer as sometimes the ADX will fall for 1 bar and then keep rising, while the overall trend is strong. The downside to this is that we exit trades later and this affects our max drawdown.
Does this strategy repaint or good for live trading?
MrBetonBlocks
⋅
@h0o0bA, recently found out it repaints. Working on a fix
nosinsad
⋅
@MrBetonBlocks, it still repaints. Are you planning to fix this in the future?
Zen-Trading-Strategies
⋅
Looks really good! What is the trading idea for this? To enter a trade on a certain ADX level as trend confirmation?
MrBetonBlocks
⋅
@Zen-Trading-Strategies, sort of yeah. When ADX crosses the threshold it is considered to be a trending market, so the idea was to follow the trend and enter trades when this happens, and exit when ADX turns down. Personally I use it with a couple other things, like Stoch, and MACD histogram, so I can confirm momentum is on the same side as the trend, and see if there are any divergences to give bias. I also look at chart patterns and horizontals for a bit on context, low ADX readings are common before a breakout. Be careful as there is no SL function within this strategy, so thats another use for horizontals. Im not a financial advisor though, so dont blindly listen to me please.