Hubert Senters here.
I get a very common question on how to use the ADX and how do you actually figure out whether a market is trending versus non-trending.
You can just use an ADX. Lots of different platforms have different versions of the ADX. This is Trade Station. You could probably match it to do the same thing.
So in this case, I’m just using an ADX. Let me give you the settings and stuff because I know everybody is going to ask. So it’s a 14 and a 20 as far as a Trigger Level.
There’s three different settings I’ll use. I’ll use a 14, a 10 or a 7. It really just depends on your stylistic approach to trading really.
So here’s how I use this. So the threshold buying is this green line. I’m going to go ahead ad format this so you can actually see it a little bit better.
So the green line is $20 so above $20 on the ADX means the market is trending. Below $20 mean it’s not trending.
So if we zoom in here then we go ok. This would be considered non-trending because the yellow line drops below the green line which is the $20 threshold line.
So in other words right here I’m talking way too much to explain this which means I’m doing a crappy job so let me draw.
When this line drops below that green line this means it’s non-trending. Below here means leave me alone. Above here means I’m probably in a good mood and in a decent trend and you got a better shot of making some money.
So if I throw another horiztonal line on here what it did with Google so here it’s saying leave me alone even though it ramp up.
The trend is going to come up resume. You can see back in here. Leave me alone. Back in here leave me alone.
Now, it won’t tell you which direction it’s going but it will tell you like hey, you’re going to have a better chance of potentially being in a trend and here’s how you smooth it out.
So this is a $20 that’s going to be smooth. And then if I want to change this so we come in here and go a 7. I’ll make it a little bit more sensitive.
And then another setting you can do would be. See it got a little tighter, a little bit more sensitive, a little bit more accurate so there it’s saying leave me alone.
The rest of the time you’re good to go. If you want to do a 7 of a 10 or a 14. Just play around with it and see whick kind of way fits your style and that’s how you figure out if something is trending or sideways and chappy.
Troy Noonan is doing a special webinar Tuesday, September 7th at 7PM EST on a sector that you may have never traded before.
If you want to learn about that I’m going to HYPERLINK you to the registration for the webinar.
Good luck. Hope it helps. See you on the next video.
Hubert.
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