ADX and Moving Averages Indicator
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In this video tutorial, let’s combine the ADX and Moving Average Indicator for a powerful trading strategy when correctly used.
Let’s set this strategy up by using the Moving Average lines.
There are 4 moving average lines.
Please use Exponential Moving average as it follows the price bar more closely as compared to Simple Moving Average.
The values for the 4 moving average lines are 13, 20, 50, and 200 days exponential moving average lines.
You can change these numbers but do leave the 50 and 200 day as it is.
If you change to lower numbers, just be wary that it causes more false signals.
You might find yourself jumping in and out of trade on a regular basis.
So it’s probably a good idea to avoid lower number and lower time frames.
These are widely recognized and accepted as the crucial turning points in the market.
With the Moving Average, if you look at your chart, the price will eventually come back and touch the 200-day line regardless how bullish or bearish it might seem.
Generally speaking, if the price is above the 200 day moving average, then it’s bullish.
If it’s below, then it’s bearish.
But that’s not how we are going to trade this
What we will do is a triple crossover.
Which means when the line cross over for the 13-day, 20-day, and 50-day, that’s when the buy or sell signal is triggered.
When the triple cross happens, we want to see all three crossing happens together.
In volatile market, you probably won’t find that happening.
But after a volatile move, the price might stabilize a little and that’s usually when you might see the tripple crossover and that’s probably a good time to enter into position.
Another thing to take note… we also want to see the price bar piercing through all the 3 moving averages.
But do not let it run too far away from the 3 lines.
Remember, any price moving will eventually need to come back and touch all the line… even 200 day line.
So what this means is that if it’s too far away, it might be over extended or we might be too late in the trend.
Watch the video as we explain much more in detail…
This lesson is over. 🙂
We will see you in the next video.
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