frame. Step #5: Take Profit when the ADX indicator breaks back below 25 The best ADX strategy seeks to only capture those profits resulted from the presence of a strong trend. The ADX indicator simply measures the strength of a trend and whether were in a trading or non-trading period. The ADX indicator works best when used in combination with other technical indicators. Moving forward, were going to look for selling opportunities. ADX Indicator settings, the ADX indicator uses a smoothing moving average in its calculation and we find out that the best ADX indicator settings to use is 14 periods. An ADX reading back below 25 suggests the prevailing trend is running out of strength. Thank you for reading! Trading Strategy Guides firmly believes that one of the easiest ways to actually become a profitable trader is to mimic the behavior of professional traders. Once the prospects of a strong trend fade away we look to take profits and wait for another trading opportunity.
So, if the price is going. We have talked a lot about trend trading strategies and you can find plenty of evidence here: macd Trend Following Strategy- Simple to learn Trading Strategy, here: How to Profit from Trading Pullbacks and here: Swing Trading Strategies that Work. We want more sellers coming into the market. All Forex traders strive to build their own profitable strategies. A verage, d irectional, i ndex.
In other words, the ADX is a trend strength indicator. Finally, your chart setup should have at the bottom both the ADX and RSI indicator, the same like in the figure below. Before we even look at the market if it either goes up or down, we must first wait for the ADX indicator to show a reading above. Last but not least the best ADX strategy also needs a place where we need to take profits, which brings us to the last step of this unique strategy. So, we want to sell when the RSI indicator breaks and show a reading below. Note* The above was an example of a sell trade using the ADX indicator trading rules. We like to keep things simple, so if the price is heading lower during the last 50 candlesticks were in a bearish trend. In a strong trend as its defined by the ADX indicator thats precisely what we want to see. Based on the ADX indicator trading rules a reading above 25 represents a strong trend and the likelihood of a trend developing.
Now, its time to focus on the catalyst that will trigger our sell signal for the best ADX strategy. Step #3: Sell when the RSI indicator breaks and show a reading below 30 For our entry signal, well be using the RSI indicator that uses the same settings as the ADX indicator settings. UP then we have the case for a strong bearish case.