It’s no secret that absolutely any forex trader would
like to know where is the bottom or top of the trend on a chart … and
although sometimes it seems a solution to this problem seems simple, in fact,
this is not so simply.
Predict whether a sequence was completed wave pattern,
or we are witnessing at the moment just roll the larger trend - it’s
really nothing like an art, not science.
In these situations we have to use multiple sources of
information presentation, and it usually helps to avoid some false trading
signals and ultimately save our funds on deposit in precisely those cases
that predict us as traders horosheee ratio of risk to profit. Always remember
this, I’ll tell you in this forex strategy of using 2 completely different
indicators, which we shared - is Average Directional Movement Index (ADX)
and the index of Parabolic Stop and Reverse (PSAR). The combination of these
two indicators allowed a forex strategy that allows to open trade transactions
as close as possible to the top or bottom of a trend.
These indicators ADX (Average Directional Movement
Index) and the PSAR (Parabolic SAR) is already registered in the trading
terminal DC, working on the best platform for trading Metatrader 4. To
activate them, go to the menu item Insert / Indicators / Trends and activate
them one by one ).
To begin, we consider both these indicators one by one and
analyze their characteristics.
Indicator ADX, or otherwise - Average Directional Movement
Index:
The ADX is nothing like trading a trend following
system, which was developed by Welles Wilder. This index can be used to trade
on its own, but usually it is applied to the price chart along with an indicator
of DMI. Which in turn is used to measure market trend.
Let us consider the mechanism of functioning of the digital
indicator DMI:
- It consists of 2 lines DI and DI -
- To apply it in the following way: we open the position to buy as soon as the DI line crosses up DI-. And we’ll open the position up for sale as soon as DI - crosses above DI.
- The intersection of lines DI / DI - gives trading signals on the input or output. But if these trading signals are used separately, they are quite often wrong, which often leads to a double loss. So, to filter these trading signals and is used indicator ADX.
The ADX is part of the trading system, which was devepoled
Wilder. It signals to us that the price in the market is ready to change their
direction of motion. As a result, combining ADX with DI, we eliminate
unnecessary losing trades.
The ADX helps the trader to determine whether there
was a moment in the forex market trend or not, and gives us information about
what stage we are the trend - the trend has just started or is already in its
final stage. He also gives us information about the states of prices in the
market as soon as there is no trend, as well as priduprezhdaet of turns and the
resumption of traffic on the current trend.