Trading Signals:
+DI Cross –DI
The +DI compares the two consecutive highs and the –DI compares the two consecutive lows.
Wells Wilder states:
-when the ADX >20 and the + DI is above the –DI. Trade/spread bet Long:
-when the ADX >20 and the -DI is above the +DI. Trade/spread bet short:
example:
Combining the ADX with other Indicators:
Ranging Market: Oscillators
Oscillators: When the ADX < 20, this tells us the market is ranging. In a Ranging market the most effective Indicators to use are Oscillators. When markets start trending again these are no more effective. Common oscillators: Bollinger Bands, Moving Average envelopes, RSI, Slow or Fast Stochastic.
Trending Market: Moving averages
When the ADX >20, the market is trending. In a Trending market the most effective Indicators to use are Averages. These keep you in a trend for the long run. An effective strategy that an be used to spread bet the EURUSD is the 3 EMA cross and ADX
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