Trading the DMI with ADX, TIS and EMA

2018年8月4日

I’m not a successful trader. I was fortunate (?) to have a father introduce me to trading futures when I was ~12 in the early/mid 70’s (he created a study guide and sat me and my 2 older sisters down at the kitchen table to review it weekly). I was ‘successful’ in the mid/late 80’s but that too went away as did the desire, time and money to continue. 4 years ago I decided to pick it up again but to-date, have not met with success. Maybe my story is typical or atypical, you can decide for yourself.

As you can tell from my past posts, I’ve tried/experimented with a lot of different strategies and ideas. As of today (this week as I write), I’ve decided to commit myself to a simple strategy of using the DMI with ADX, TSI, and a trilogy of EMA’s (that is an accumulate of many different things I've learned in the past 4 years).

The two books (trading related) that I focus on are listed here:
Welles Wilder Book

Elder’s Book

Details runs amuck on the web regarding the DMI and ADX but these (especially the first link on trading breakouts) I’ve found to be more beneficial.
Various links for ADX:
Trading Breakouts
(you can download the pdf from this site too)

ADX Breakouts

What is my current configuration:
EMA on price at 9/13/26 period
TSI: 25/13/7 (the 25 & 13 are default on TV but I use the 7 on trigger
DMI/ADX: 14/14 these are defaults as specified by Wilder though you ‘ll see experiments on the web with a lot of different setups. Personally, I try to use the default as Wilder has laid out and not try to optimize them.
I use the same configurations on all time frames that I track (weekly, daily, and 4 hour)
As you review the slides on the breakout strategy from above, it walks through a scenario of using a 20 period EMA in conjunction with DMI/ADX. I’ve chosen to use the 13 and 26 as a boundary to achieve the same concept.

On pg. 48 of his book, Wilder notes: “I know that for many, the Directional Movement concept and its implications have not been easy to comprehend; however, those who pursue it will be rewarded for their effort.” No matter how many times I’ve dropped using the ADX, I’ve always held on to this statement and have come back to it to determine what I’ve missing or haven’t gotten.

As I said, I’m not a successful trader today, but my goal is to work to become one.
In the opening to his book, Elder notes: “You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody. This is the life of a successful trader”. Then, in the next 250 pages, dispels myths and such in addition to working through all sorts of tools to achieve this goal.

So, why do I feel I can achieve this goal? Well, the 3rd non-trading book I’m reading gives me this hope:
Ecclesiastes 9:11 “I have seen something else under the sun: The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all.” The substance of hope and the desire to be ready for your time when it comes.

In following posts, I’ll work through examples of how I try to use these indicators (primarily the DMI/ADX).