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!

The basic chart reading system (within the overall Forex trading system being taught on this site) is the result of looking for that non-existent Holy Grail to trading. In my earlier days, I focused a lot of energy on space and energy, and there was an incredible amount of market behavior codification.

Then I progressed up to primary focus of time, which gave me even more ammunition toward that unattainable absolute of perfection. I really thought that I was getting closer and closer, and I was, but there was the one level above that: Creation.

Most of the “Legends” of trading, like Gann, never even got it close on the time aspect of the markets, and never even got to the level of the relevant principles of creation. You are and will be studying material that is far beyond what Gann was looking for because I have discovered the time aspects that Gann was searching out. He just didn’t have computers and software that we have today.

All successful traders trade on knowledge and confidence. Not one trades on merely belief. They know their system or analysis will work to produce profits over time, and they trade according to what their system tells them.

Right or wrong, their system and rules of their system tell them what to do, and they do it. They know that over time they will profit. They have the confidence that their system rules will produce profit. It’s not belief; it is knowledge backed with confidence.

Their system is the idea, and their confidence is taking the action required by the system.

So the basic chart reading system is based on space, time, energy and objects with the goal of creation. We are, in essence, using the agreements of this physical universe to determine which way the market should move, and help create that with a high probability of success.

In the basic chart reading system, which is the foundation of more advanced levels of the chart reading, we want to smooth out the motion of the energy particles that we call ‘the market’.

We want to know what the market wave is doing when compared to the smoothed wave so we can spot discrepancies in their action relative to each other. That’s what the MACD, the Moving Average Convergence/Divergence, is for, and what the “MACD Histogram” is for.

In fact, you could use the info on divergences with other oscillating indicators if you so choose.

We also want to know the present strength or weakness levels of the action that has taken place so we know the present time strength or weakness on a given chart. That is what the ADX, the Average Directional indeX is for: Present Time Strength or Weakness.

That makes it so we have market action being compared to the action of a smoothed wave of its action, and the current strength or weakness of that action for a given moment.

What We Are Doing In Predicting Market Action

Know here that all we are doing in predicting market action is combining consecutive moments and continually creating what is happening. We are taking combinations of strength and weakness in the past, present and future to tell us what will be happening.

Behold! The Almighty They. Who Are They?

In combining our consecutive moments to get our various combinations, we are determining what those with the most money will be doing and we can ride that until we are part of the group everyone hates: They. “They” are really nothing more than more experienced creators, better creators in the markets. “They” understands on some level the principles of creation, the conditions of creation, and follow the rules of creation better than the weak, pathetic “we” who loves to hate the almighty “they”.

“They” will always win against “we” even though “we” vastly outnumbers “they”. It’s not even comparatively close, it’s like 1000:1 or worse, where there’s 1000 “we” members for every member of “they”. And yet “they” always win. What’s the deal with that?

Closer adherence to the principles and rules of creation is the deal. When one person can out-create a thousand other people, certainly that one person deserves some awe from the thousand. And thus we hear the same shame, blame and regret from the weak and helpless “we” toward the almighty “they”. It’s incredible, and thus trading mythology is born.

If you want to be part of “they”, then you, too, will have to more closely follow the principles and rules of creation. That’s all this entire system is: what the rules and principles of creation are as applied to markets, and how to follow them.

How the Chart Reading System Will Work

So the basic chart reading system is how to determine what the market should do by reading energy action in time. The accurate reading of the energy action in time gives us the moments of highest probability entry in a future direction of creation of the coming energy action. And we get to contribute to that creation!

By our proper contribution, so shall we profit. Trading commandment number one is “Contribute properly to creation, and ye shall profit in abundance. Do not thee contribute wrongly, for thy shall be stripped bare of thine clothes to the degree of the counter-contributive violation.”

So learn well the indicators, how to use them, what they mean, and how to compare them.

Again, as always, ask if you have any questions, comment if you have any comments. Please.

Have a truly phenomenal trading day!