Parts 3 and 4 of the “on chart” lessons for reading the ADX. They go pretty quick and there’s some icky clicking, but I made them before I figured out how to really reduce the clicking. Anyway, it’s the PRINCIPLES of the ADX that matter here, and how to combine various patterns of strength and weakness. The ADX is one indicator that is great at showing strength and weakness.

This first video for today also has a little bit on the DMI/DI lines, in addition to showing the ADX principles on real charts. I don’t pay the directional movement indicator/index lines much attention because they really don’t deserve it, but there is a little bit. You could spend years studying those two lines and trying to figure out one significance after another. I don’t, however recommend that course of study.

This second video on the ADX is more of the same, but goes into some other aspects of ADX reading that aren’t covered in other videos. Again, these are from real time charts…

That’s about the extent of the information on the ADX that I’ll be giving out here on the blog. There will be more on the inside, coming in August.

The principles of the ADX and the conditions are given in previous posts.

So if you have any comments or questions, please leave them below. And while you’re at it, sign up for the email stuff above (and to the right). You give me your name and email address, and I’ll give you free silver membership into the “Inner Sanctum” when it opens up in August.

And let me know what kind of stuff you want to see in the Inner Sactum. I’ll do what I can to make it happen. Have a truly phenomenal trading day!

I’ve been watching the EUR/USD and thought there might be a real time example of a bigger chart strength plus the (multiple) smaller chart weakness. Luckily I was right. The video below shows the possible trade as it’s setting up. It’s not a trade - yet, but it’s here now.

If you have any questions, please ask and I’ll answer as quickly as I can. Any comments - great! Tell me what you want to learn about here, and if I can immediately fit it in, I will. If not, I’ll let you know when it will be scheduled.

The point here is that I want to teach you a basic model of trading, something that is simple, so you can practice managing the system quickly. Paper trading the forex markets is good if you treat the “paper trading” as THE time to learn how to manage the trading system that you’re using. More on that another day.

So the basic concept here is that when you have the bigger chart strength divergence (to go down in the video example) combined with multiple smaller chart weakness (the weakness is in moving higher, so the market looks like it wants to move down, lower) is a great place to use the previous peak take out basic trading model.

The two combine beautifully. The purpose of indicators is to increase the probabilities of your basic trading model in your favor. The divergences do that very well in forex markets - especially combined with the previous peak takeout model.

Any questions? Ask. I’ll answer. Stay great and have a truly phenomenal trading day!

There seems to be an agreement by the neophytes and intermediate traders that there is some “holy grail” system of reading charts that will allow them to trade with 100% accuracy. There ain’t such a creature short of a time sight that will allow you to see what happened before it happens. And there isn’t one of those in existence on this planet yet.

While the chart reading system to be revealed down the road is as close as I’ve ever seen to such a “holy grail”, the sad truth of the matter is that we still have to read the charts. Anyone who has ever seen me call the market before it happens can tell you that I’m the best they’ve ever seen. Anyone who has seen me call a market extreme within moments of it actually occurring will tell you it’s just plain unreal.

BUT I have been unable to actually teach anyone to do what I can do in calling the market. The WHY behind that lies in people’s laziness: People in general will not do what I say has to be done to get as good as I am in calling the market. I’m just persistent and very disciplined. The truth of the matter is that you can be better than me if you’ll just work at it harder than me over time.

What is it that I say to do? Well, the first thing is to really learn the basics of risk and money management. Then really learn and understand the basic risk and money management system and how it operates in real time. Then really learn the basics behind chart reading. Then really learn each indicator, what it means, how it operates, how to read its signals, and how it fits into the basic risk and money management model.

Every piece of the chart reading system plays its part in the risk and money management system, basic through the advanced.

Then write a book every day on the sequences of charts and on the reverse of them covering how you should have looked at the market at the time if you were wrong at all, or how you saw the market as it was happening if you were right. And write that book every trading day for at least 6 months. It’s time consuming and it becomes quite boring after a while, but you will start to really “get it” and be able to think with it all quickly. You will acquire a sort of “feel” for the market you choose to do this with. Pick one market.

In fact, the complete system was directly enhanced in relation to, and around the more advanced risk and money management system. It was developed according the basic risk and money management model. I’m not aware of any system that has been directly created with the foundation of risk and money management to the degree that this complete system has been created.

We’ll get to a lot of that down the road, but I just wanted to give you an idea of where I am headed.

Have a fantastic Father’s Day! I will.