ADX - PPO Combo

[caruv]

Hello everybody,

I live in Canada and have abandoned buy and hope investing and am looking at swing trading. Stochastics, candlestick reversal patterns and a EMA 8-d work well for me but I would like to narrow down my search to a more accurate reversal signal and I think the PPO-ADX combo will do that.

I would like to use the PPO and ADX as follows:

1) PPO
I want to find good/strong stocks that have suddenly sold off/corrected and are ready to bounce back up. So I am looking for a sudden and deep drop in the PPO. I am not sure whether to enter an absolute number e.g -2,-3,-4,-5 etc number or a standard deviation to try and capture a current big drop in the PPO. Would a volatility indicator applied to the PPO work? I have no idea how to do this. The reason for using strong stocks is this: I am hoping that when a "strong" stock is in a strong sector that goes down, it is due to a correction and not a reversal in trend. If I had to use "cheap" stocks I am worried that I may pick up more false signals i.e. the stock is reversing. I guess one could use trending stocks as well as sideways moving stocks e.g. with stochastics bouncing between 20 and 80, in the search?

2) ADX

I want to use the ADX to measure the strength of the correction. So I guess I can set it at 40 in order to find big moves historically

So in effect by using the two TI together i.e. PPO above and ADX below I will see a PINCH.

I want to find all stocks that are showing this pattern i.e. say over the past 3-5-7 days.

Thanks in advance for your input

 

[Jessi_trader]

Hi caruv

I would suggest you use these indicators as a secondary tool. This is my personal opinion.

These indicators are lagging tools, they triggers signal when market has already moved. If you reduce the timeframe then they give too many signals and probably too early.

You have to personalised them using different settings. Wilder created fantastic indicator ADX. However, only take when it is rising from bottom... from below 20 I guess. I used them long back.

JT

Hello everybody,

I live in Canada and have abandoned buy and hope investing and am looking at swing trading. Stochastics, candlestick reversal patterns and a EMA 8-d work well for me but I would like to narrow down my search to a more accurate reversal signal and I think the PPO-ADX combo will do that.

I would like to use the PPO and ADX as follows:

1) PPO
I want to find good/strong stocks that have suddenly sold off/corrected and are ready to bounce back up. So I am looking for a sudden and deep drop in the PPO. I am not sure whether to enter an absolute number e.g -2,-3,-4,-5 etc number or a standard deviation to try and capture a current big drop in the PPO. Would a volatility indicator applied to the PPO work? I have no idea how to do this. The reason for using strong stocks is this: I am hoping that when a "strong" stock is in a strong sector that goes down, it is due to a correction and not a reversal in trend. If I had to use "cheap" stocks I am worried that I may pick up more false signals i.e. the stock is reversing. I guess one could use trending stocks as well as sideways moving stocks e.g. with stochastics bouncing between 20 and 80, in the search?

2) ADX

I want to use the ADX to measure the strength of the correction. So I guess I can set it at 40 in order to find big moves historically

So in effect by using the two TI together i.e. PPO above and ADX below I will see a PINCH.

I want to find all stocks that are showing this pattern i.e. say over the past 3-5-7 days.

Thanks in advance for your input