Topic: ADX and ADI+ Opening Logic Conditions confusion

In the attached strategy, I notice that bar 340 to 341, the opening logic condition for an ADX rising is true, but the ADX+ goes down. A short position is created as a result. However, the way I understand the Opening Logic conditions, ADX must be FALLING and ADX+ must be falling in order to enter a short position. Why is this the case?

Post's attachments

USDCHF5Min_O_ADX_Rises_O_DI_Rises.xml 4.9 kb, 15 downloads since 2011-01-26 

You don't have the permssions to download the attachments of this post.

Re: ADX and ADI+ Opening Logic Conditions confusion

binaryoptions wrote:

...I notice that bar 340 to 341...

Please make a screenshot or screenshots of where do you think it is going south, mark the troublesome points and post them.

3 (edited by binaryoptions 2011-01-26 16:23:06)

Re: ADX and ADI+ Opening Logic Conditions confusion

Here is Bar 341 which shows ADX at 2.77956 and ADI+ 16.4241

http://s2.postimage.org/2k27sqpic/Bar_341_ADX_2_77956_ADXPlus_16_4241.jpg

Here is Bar 342 which shows ADX at 2.85391 and ADI+ 16.2285

http://s2.postimage.org/2k2eew3hg/Bar_342_ADX_2_85391_ADXPlus_16_2285_ADD_Short.jpg

ADX goes up from bar 341 to 342 according to opening logic rules. But ADI+ goes down approx .22

Per Opening Logic Rules on this strategy, both ADX and ADI+ must be up. So I don't understand

http://s2.postimage.org/2k2l11hgk/ADXRises_ADXPlus_Rises_Confusion.jpg

I had make an error in identifying the bars in my previous post. But you can see by the screenshots the correct bars in question.

Thanks for your help, Footon

Re: ADX and ADI+ Opening Logic Conditions confusion

Nothing wrong there fortunately. If you look at the signals ADX is giving, there are only 2 kinds of them - yes/yes or no/no. In your case ADX rises, satisfying the logic, and giving a go-ahead for a position to be opened. The reason behind it is in the nature of the ADX indicator - it measures the strength, not the direction. In your strategy ADX confirms trend strength while ADI+ indicates direction.

Hope this makes sense to you! smile

Let's wander off topic a bit  lol , I see you're doing rather well in strategy development, have you tested strats live as well? If the answer is yes, how are results compared to initial backtests?

Re: ADX and ADI+ Opening Logic Conditions confusion

Footon,
Thanks for your reply.
It makes sense from your explanation. Yet, according to the FSB logic "mirror" rules, I thought it would go short (opposite) if ADX falls and if DI+ falls, qualifying it for the "no/no" observation you indicated. DI+ does fall, but the ADX is rising. I understand though the that the DI is a subcomponent of the ADX, so, it does make sense that the condition is opened and then it take the position of the DI+ mirror logic (falls -- goes short). But this subcomponent rule is not independently calculated; one indicator is up, (the ADX), the other is down (DI+). Both have to be in the same direction according to FSB logic.

footon wrote:

Nothing wrong there fortunately. If you look at the signals ADX is giving, there are only 2 kinds of them - yes/yes or no/no. In your case ADX rises, satisfying the logic, and giving a go-ahead for a position to be opened. The reason behind it is in the nature of the ADX indicator - it measures the strength, not the direction. In your strategy ADX confirms trend strength while ADI+ indicates direction.


footon wrote:

Let's wander off topic a bit  lol , I see you're doing rather well in strategy development, have you tested strats live as well? If the answer is yes, how are results compared to initial backtests?

Nothing live at the moment. But my objective is to develop strategies, port them over to FST, trade them with MT5 to zulutrade, first as demo, then live. However, the 10 signal providers already I have on my demo zulu have done better than I have anticipated on a 100:1 account, using fxtrade.oanda.com as a hedge account.

If there are FST on zulutrade, it'd be greate to know about them!  smile

Re: ADX and ADI+ Opening Logic Conditions confusion

The strategy I uploaded works on the time frames (6/10 - 9/10) Year 2010 for EUR/USD, USD/CHF and GBP/USD pretty nicely.

Re: ADX and ADI+ Opening Logic Conditions confusion

I understand that this is an old system but I'll try this out and see if this still works.