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!

When you’re trading Forex, strength and weakness agreements have a tendency to come in handy. One of my favorite indicators for tracking strength and weakness patterns is the ADX. Today, we’ll cover ADX trends and their respective strengths and weaknesses, and an example of ADX weakness in time, on consecutive charts.

That’s some of what’s on today’s video on ADX Trends:

So the first thing you need to have a trend showing on the ADX is for there to be strength showing on a move. If the market moves lower and the ADX increases, that’s a stong move down, and the first step needed to have an ADX trend.

The second component needed is for the market to retrace some of the strong move, and have the ADX decrease, saying that there’s weakness in the counter-strength direction. So if the market moves lower and the ADX increases showing strength, then the market moves higher with the ADX decreasing, that’s the second part of having an ADX trend.

The third and final component is for the market to move farther in the direction of the prior strength.
Then there is an ADX trend on that chart, and that trend is either strong or weak.

In a strong trend, the ADX moves higher than it was at the end of the strong move in the same direction. In a weak trend, the ADX does not move higher than it was at the end of the strong move in the same direction.

Example: The market moves down, the ADX increases - shows strength in moving lower.
The market then moves higher, and the ADX decreases - shows weakness in moving higher.
The market then moves farther down than it was before the retracement up began.

That’s an ADX trend, and it is either strong (if the ADX is also higher than it was as the market moved farther), or weak (if the ADX does not move higher than it was as the market moved farther).

That’s it on the ADX trends. If you have any questions or comments, please leave them and I will get back to you as soon as I can. Have a tremendously successful trading day!

When you’re trading Forex markets, depending on your trading system, you might have to be able to track strength and weakness situations. The ADX, Average Directional Index, is a great indicator for tracking that strength and weakness on one chart.

Here is a video on ADX Moves in a forex market…

When the market you’re watching is moving higher, and the ADX is rising to the upward motion, that upward motion is strong. If the ADX is falling, then that upward motion is weak.

When the market you’re watching is moving lower, and the ADX is rising to the downward motion, that downward motion is strong. If the ADX is falling, then that downward motion is weak.

You’ll see on the next video how to use the ADX to track trend direction on a chart.

If you have any questions or comments, please leave them. I’ll answer or respond as quickly as I can.

Have a fantastic trading day!

Money is an idea backed with confidence. Trading Forex currency pairs is the idea. The confidence part is the standard following of the conditions and combinations in actually trading. All the knowingness you will ever have is already there, and it is summed up in be. (BE a highly successful trader. That’s unfortunately the entire secret to trading successfully.)

The Foundation: The Trading Rules, and Risk and Money Management

While following the four trading rules and proper money management techniques, we cannot ever lose money in the long run. The foundation of everything we do is tied to the four trading rules, and risk and money management. Everything else is built around that super strong foundation that is on super strong land. Everything else adds certainty or much higher probabilities on market movement direction.

Strength or Weakness Divergeneces are There or Not There

Signals are either there or not there. It’s not ever “close”. It’s not ever “almost there”. It’s not ever “forming”. There is no such thing as “maybe”. It is either there, or it is not there. If it is not clearly there, you’re on the wrong chart. There are no shades of grey. It’s yes, or it’s no. (I’m not always all “Aristotelian” in my logic, but it’s necessary here.)

We find that by locating specific patterns of discrepancies in waves in time, starting with future strength on a bigger chart, combined with agreement in past weakness on charts below the future strength, all agreeing on which way the market will move, we can accurately predict market direction, at least for a while.

We continually combine conditions and patterns of strength and weakness in temporal agreement on direction. In other words, for example, if we have strength to move up, we want to see weakness in downward motion on smaller charts. Strength on bigger charts combined with counter-directional weakness on smaller charts is what we want. We trade strength. We trade “Strengthenings”.

Every signal, every motion on the indicators and market, every wave have their respective aspects of strength and weakness. Combining these aspects in real time to get agreement on direction is what we do in predicting market action. It’s all about discrepancies in comparable waves in time.

Higher probabilities are still less certain than certainties. Thus, if we are trading the higher probabilities, we must be tighter on our stops. When we are trading our certainties, we can be looser on our stops. The certainties are the line-ups from a next chart in time that can push the market farther in a direction. The higher probability trades are given to us solely in the form of weakness with no larger chart future strength.

The answer to the question, “Is the market done moving in the direction it is currently moving (at least for now)?” is the exact same answer as the question, “Do we have a line-up from a next chart that can push the market right now?” Line-ups show our future strength(s) and our past weakness(es) to give us certainty that the market will move in the direction we say it will move.

We only ever work from the last larger line-up (and determine where we are in that line-up, as given by time) and now. We project into the future by determining what must happen to give us the conditions we must have to have a trade, or to continue in a trade.

When to ignore signals and/or line-ups is equally as important as when to heed them. The answer of when to ignore is found in TIME.

Time is nothing more than advanced wave theory (not ever to be covered on this blog, but in the coming membership site here (with a free option, too), and properly read, time has no more meaning than waves.

There is no such thing as the market behaving improperly. There is only reading the charts properly or improperly. The market is never wrong in what it is doing because it is doing it and you agree to it.

If you have any comments or questions, please ask or leave them. I’ll get to you as soon as I possibly can. Stay great and trade your favorite currency pair well!

Things are crazy here, so I won’t be making a forex training video tonight. Instead, here’s some great, useful information for if you use the ADX (Average Directional Index).

ADX Basics: Definitions of move and trend, and the 4 Main ADX Principles

In the ADX we can see that we have varying degrees of strength and weakness. Those varying degrees are given below, and are important later on because when certain conditions are not met, we KNOW what has to happen. Every single time, but not always to a new extreme.

Definition of move on the ADX:

When the market makes a move and the ADX changes direction. (i.e. from moving up to now moving down, or from moving down to now moving up. A flat ADX is not a change in direction.)

1. When the market makes a move and the ADX increases, that move is a strong move on that chart at that time.

2. When the market makes a move and the ADX decreases, that move is a weak move on that chart at that time.

Definition of trend on the ADX:

After a strong move (as above, or trend of any kind) the market moves in the other direction and the ADX decreases, THEN the market moves farther in the direction of the previously strong move (or trend of any kind), we now have a trend on that chart at that time.

3. In a trend, when the ADX moves higher than it was at its previous high peak, we have a strong trend on that chart at that time.

4. In a trend, when the ADX is not now higher than it was at its previous high peak, we have a weak trend on that chart at that time.

The idea behind the definition of trend…

Is that we have strength in any form (a weak trend is still stronger than a weak move), then the ADX decreases, and after that decrease, the market then moves farther than it did before in the previous direction of strength. [Please note in the above that we have moves and trends. Also note that we have strong move, weak move, strong trend, weak trend.]

Definition: End of a Trend

A trend is over on that chart when the ADX tracks strength in the direction opposite the trend. Once the ADX says a trend is over on that chart, more strength on that chart in the same direction is now a move until the conditions are again met for it to be a trend on that chart at that time.

If the ADX does not fall between moves in the market, and still tracks strength in a direction then keeps moving in that direction, it is still a move.

The ADX must fall, even just a little bit, before again moving up as the market moves farther that it previously did in order to have a trend. Once the market moves farther, we have either a strong trend or a weak trend.

In sequence from weakest to strongest: weak move, strong move, weak trend, strong trend. In defining trend, anything other than a weak or very weak move counts as previous strength.

Only compare ADX peaks that are tracking the same direction of movement or trend strength.

ADX Principles Shown on a Chart

Let us take a look at the ADX (black line indicator below) regarding strong and weak moves:

It is possible to have a move be weak, then turn strong. It is possible to have a move be strong then turn weak. It is possible to have a weak trend turn to a strong trend. It is possible to have a strong trend turn to a weak trend, or even a weak move. See the coming video(s) on the ADX for more explanation.

If you have any questions or comments, please leave them. I’ll get back to answer them asap. Since part of my goal here is for you to understand what I’m teaching here, if there is anything you don’t “get”, just ask.

Have a truly phenomenal trading day (and weekend!) P)