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Mr.Edward Revy - ADX+EMA SYSTEM.
I want to share one very good idea with everyone. This is not a trading strategy but a technique to determine which system to use and when. There are many systems available to use some are trend following systems like moving average crossover and some are oscillator based system which utilize indicators such as Stochastic, Rsi and William %R but if all these systems are good then why they work sometimes and sometimes they fail?
The reason is selection of a good system at wrong time.
We can overcome this problem with the use of one simple indicator ADX(14)
The level of ADX can help us to decide which system to use at a given point of time. Now let me explain you how to accomplish this goal.
PLOT ADX(14) ON CHART FOR YOUR CURRENCY PAIR. IF... 1)ADX is below 20 - USE OSCILLATOR BASED SYSTEM(RSI,STOCHASTIC ETC.)
2)ADX is above 30 - USE TREND FOLLOWING SYSTEM(MOVING AVERAGE,MACD ETC.)
3)ADX is at 45 or above it - BOOK PROFITS.(Wait for new entry)
4)ADX IS RISING FROM LEVEL BELOW 18 AND THEN GOING ABOVE 23 - USE TREND FOLLOWING SYSTEM.
5)ADX DECLINING FROM LEVEL ABOVE 30 AND THEN GOING BELOW 27 - USE OSCILLATOR BASED SYSTEM.
The above mentioned method will help you select right system at right time. This system selection technique works very well according to my experience. I want to tell you again that this technique only helps to select right system at right time and it is not a holy grail.
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