Last week I came across a video on YouTube where an ADX trading strategy was discussed, I was surprised as the author of the video claimed that this strategy works 92% of the time.
That’s probably a very profitable strategy, but what if we backtest it using an Expert advisor? are we looking at a holy grail strategy? continue watching to know and don’t forget the usual thumbs up if you enjoy this kind of video.
All Forex traders strive to build their profitable strategies, but this day is your lucky day! We’re going over a simple ADX strategy with some examples for you to practice this trading method. This strategy seems to have a success rate of 92%, so basically if you place 100 trades, 92 of them will end up hitting the take profit. let me first share with you this strategy before we backtest it using an expert advisor.
No worries, I will share with you the expert advisor for absolutely free, especially if it does work.
The principles of the Average Directional Index or ADX can apply to almost all tradable assets including Forex pairs, Stocks, mutual funds, and even futures contracts. ADX has become an exceptionally useful indicator for traders as it helps determine when the price is trending strongly.
in many cases, it is the ultimate trend indicator. After all, the trend may be your friend, but it sure helps to know who your friends are.
Before we go any further. let’s add the indicator to our chart.
If you are on Tradingview, you can simply hit on “indicators’ and search for the “Directional Movement Index”, Once you find it, simply double click it and you will notice that it has been added to your chart.
The directional movement index (DMI) is a technical indicator that measures both the strength and direction of a price movement and is intended to reduce false signals.
DMI helps in determining the price direction and the strength of the movement. It does so by comparing the current price with previous lows and highs, drawing lines of positive directional movement (+DI) and negative directional movement (-DI).
In general, the larger the spread between the two primary lines +DI and -DI the stronger the price trend. If +DI is way above -DI the price is on an uptrend.
On the other hand, If -DI is way above +DI then the price trend is strongly down.
The ADX measures the strength of the trend, either up or down; a reading above 25 indicates a strong trend.