how accurate of ADX indicator ?

[lkthomas]

Hi, I want to ask couple of question about ADX indicator

I heard that when the ADX line trend up close to 20 area, which means the trend are building up, I try to trade with ADX couple of times which is gives me not as accurate as I expected, most likely it's lagging behind the market, I am wondering what combination of indicator work best with ADX ? ( I am using MACD + ADX, still lagging behind...)

Thanks all

 

[juanbyte]

There are several ways to use the ADX

Have a look at http://www.incrediblecharts.com/technical/directional_movement.htm

 

[lkthomas]

ok, I got those knowledge already, I want to getting advance on 5-15mins trade with ADX, anyone could suggest some useful docs please ?! Thanks.

 

[juanbyte]

It would depend on the timescale of the charts that you are using.

In general the longer the timescale the lower the ADX period.

 

[lkthomas]

mind to give me a suggested ADX period on 5mins chart please ?

 

[juanbyte]

I use the ADX in a totally different way to you, I find that looking for vee bottoms, a breakout from a flat market and the begining of a trend difficult to read.

The best way is to look back a couple years through your charts with various periods for the ADX and see what works for you.

Personally I would not do what you are doing, yes you can get some big moves but also I find a lot of false signals.

 

[Akuma99]

ADX is no more useful as a signal generator than using the cross over of two moving averages, which of course means (like all indicators) it is lagging. The ADX is the only indicator I use on my charts, but I only use it to keep me in strong breakout moves, hence I pay attention only to the trend following line, ignoring the directional lines.

So essentially I find the ADX a nice indicator to use as an exit tool on breakout moves, and support, resistance, trend lines and the price action itself for entries. I use the ADX on 1H charts with a setting of 11, but best to play around with it yourself to see which suits you best on the timeframe you use.

I have done a beginners article on it here: http://akuma99.blogspot.com/2005/11/theory-adx.html if it is of any help.