Forex Trading Strategy Using The ADX And Moving Average Combination

this is going to be video number 64, but it’s going to be video number 26 of module free and, we’re going to be talking about the moving averages all right, so here we have some moving averages applied to the chart and we also have the a DX in there as well and as you may recall from the other video I mean module 2 we was talking about moving averages we’ve got actually got free here and there’s two exponential and once moved, all right the exponential moving averages will basically will follow the market prices a little bit more tighter than the other ones such as Lyonya weighted smoothed and there’s one more one I believe they’re coming off top of my head and the simple one as well, all right I am most traders will tend to use the exponential moving average, all right and the different types of period settings again people use different settings in their period box as well, but what I would also tend to use is over a 50 or 100 or 200 moving average as well set to an exponential, I’m going to just give it a different color for the time being, all right and basically traders will use this as a line to work out when the market is going to change direction, so when it hits it you can see here that the mark is you know it’s definitely reestablished a new trend direction it was initially going up and now it’s starting to come back down now you can see where it’s hit the top part of it as well and this is an indication that the trend is about soon to change once more, so some people have actually used this line and they call this like the money line, because when the markets been going up or down for, so for, so long the market needs to come back and eventually touch this 200 moving average and it does, and then once there’s a never can break from its opposite direction, you need to allow it to hit at least once or twice and once it’s sort of moved away a fair amount then you can be safe to say that it’s now a trend direction, but we’ve got some other moving averages on here as well which is kind of confirmation triggers to let you know that the trend has changed this was a this will only be more apparent on larger timeframes and it will on smaller timeframes, because you’re going to be seeing more activity on the smaller timeframes ok these here are actually happening these bars appear every day as opposed to here where we’re on the 15-minute timeframe each of these bars were going to happen every 15 minutes, so you’re going to see trend changes and appear more often, but these will be like trend changes inside a trend change for instance you might have a trend going up, this could be your main trend alright and this could be like your daily timeframe alright then you might zoom back down into a 15-minute time frame and you might see similar activity going on, but now it’s kind of really changing alright it might change it completely different, but this might be on the 15-minute time frame, so you’re going to have trends within trends, so there was an uptrend game with the daily data trend now, but the daily trend is still pointing up while this 15-minute trend pointed down does that make sense, all right same likewise on the 5-minute 30-minute one hour of four hour time frames you’re going to have trends within trends, so you’re going to see this purple line that I’ve drill, and then, let’s just do this black, so, if most of us are a color, but I can’t see that, all right you should be able to see that, now this one here sorry some ideal color for color on people is smooth two green, so this color here is a smooth moving average this one here is an exponential set to 200 this blue one and this red one here is set to 12 and 24 respectively, and you can see that this black line does get hit quite a few times and it can be quite you know taxing on the brain especially emotionally as well that you know you thinking it might come down and it’s pissed off and it’s gone the other way pissed off that I mentioned there they weren’t the other word, all right, so is pissed off the other way, and you know it can get you know you can get frustrating, so using a larger time frames like four hour time frames and, so forth for me we can see that we’ve had this long trend going up, and then the 200 moving average gets here these like you warned it number one, and to let you know that this long up trend is now to change it’s broken below and now it’s hit the moving average again, and then it’s headed again these here is like your money life it hits this again after the trend has been established the dot new downtrend which is normally signified by these other moving averages that we have in here as well we have this smooth 24 moving average and we have the 12 and 24 exponential moving average, all right and as they’ve basically you know of all come underneath the black line the trend is it just keeps on coming down alright now here you can see that as the markets come through try the break the top part that what we can call it the money line, if you wish the 200 moving average it broke it a little bit bitten close above then we’ve got this little kind of note here which is kind of like this kind of warning over here to let us know that we’re about to change trend, because the market had actually broken above then eventually you see that every single one of these lines here broke that 200 moving average line, and then the trend establish yourself and went back up again alright now that’s just one method of use now I’m just showing you the different ways that you can use these moving averages alright and this one as I say is exponential moving averages are set to a 200 period which is basically 200 for our bars going back into the past and it’s adding all those figures up alright and this one’s an exponential moving average each of these have different properties figures and formulas attached to them for me it’s just too much to remember I just want to see patterns that emerge in the market and see how I can take advantage of them, all right and you can go ahead and search for smooth moving averages line near moving averages weighted moving average or exponential moving averages and get an understanding of what it is that they’re saying and it will take literally about three minutes to see well that is, if you’re into that kind of stuff all right, but for the most part I think that at the end of the day, if you can see how these patterns were emerging and you can you know make sure you can put that round peg in that round hole you’ll be just fine alright, so with that bearing in mind we can we can use that knowledge and we’ll combine it with the ADX, now the ADX, there are different ways that you can go ahead and get a signal out of this and the first one is isms take that line tool out and you see where they cross over, all right I like to use that is a triple cross, and the triple cross is only happen every now net now you will see based on the kind of activity in the market, if it’s a long move down like this you will see sometimes that the market with the moving averages will take a while to all come up together and line up together and piss off together you know peel away from each other like for instance here you can see where they’ve all met up at the same time we’re over here you can see the market was quite fierce, and then eventually started to move back the other way, but it took quite a while for these moving averages to really establish that link together or touching each other at the same time hasn’t really done this, but it’s basically a little bit off, all right and you can see that these happen every once in a while I where they all cross over more or less at the same time all forever, all right, and then we can try and find patterns that happen in the market with the ADX when that actually happens, because sometimes when you see these crossovers not necessarily all the time that you can actually make money out of it, so you need an extra one to confirm it, all right now to be on the safe side I’ve noticed that the ADX are positive directional index you can see it’s just above the 30 line, so that would be, to jump in on that one, and then take it to the next support level which is over here, all right and using the knowledge that we’ve just gained we can see that this is actually come up to the 200 moving average, so now we can actually take that knowledge as well and actually go the other way plus we get some other candle formations at the top layer like an evening star and which we’ll get into later on which lets us know that we know we’re in a minute for a trend change as well, all right also take a look at the moving averages you see how the moving averages start to pierce away from each other well the further away that these moving averages are away from the currency price or even from its own neighboring moving average like this one here this one here in this one here is a bit of a gap in between each one well the further the way the gap is the better I’ve seen some people who have actually said oh well the trays going back the other way like for instance they’ve come down and they’ve seen it move down like this alright, and then it’s coming back up a little bit like here, but it hasn’t really hit the middle moving average or the one on the outside, all right, so they get a little bit panicky and they close out when there was really no signal there to close out, all right the best time to really get out, if you’re in a, if you know that you’re at the other bottom of the trend is completely understood disputable that you’re at the bottom of a trend there’s no reason for you to get out on the first or on the second a moving average you can get out when them when the price is touch the third moving average with this one here in this case is actually the 24th moved apply too close I’m actually going to save this as a template for you as well, so you can just simply go ahead and load the templates up alright, so when you see these cross over each other you want to try and make sure that the positive directional index is also above the 30 this will insure us a little bit more room to get you know get as much as we can out of it, all right that’s just one method the other method that you could use as well is that when these actually cross up together it doesn’t really matter where the positive R direction the negative or the positive directional index is, but as long as they cross at the same time you can see that this one right here they cross at the same time, but it doesn’t actually sits above the 30 s 30 level that’s fine there’s another exception, because I’ve noticed that there’s quite a few times when the market is actually crossed and it hasn’t been above the failure line it’s still gone up, so that’s another pattern that we can look out for now, if there’s only two lines that are crossing the 24 and a 12 exponential moving average, if I need two of those are actually crossing at the same time then you want to make sure that a positive of the negative directional index is above 30 and also possibly to have the ADX signal line as well as a strength line to be above the 30 as well to ensure that it’s going to be more power behind it, all right, so see, if we can find some more examples our also as well it’s also interesting to note is that when you see a signal appearing in the market you want to try and be very cautious at where the signal appears, so here is a crossover right here and what we want to take a look at is that how far away that this crossover is away from the bar that’s right on the knee fear, because we need to wait once this bar finishes we need to get in on the next one all right, but this first bar is very important, if it’s too far away, if the bars up here, and then we went long on the next bar you’ll find that it will come down, all right, so we want to try and get in as early as possible, but at the beginning of that trend change and to do that, you need to try and get right bang in the middle, but when it actually happens like here is a crossover right here it happens we’re on a date off for our time frame, so depending on what time frame that you’re actually working off it would vary based on the you know the settings here on how far away it is away from the candle and, you need to sit there, because it’s really no magic number, you need to sit there in a persevere with the numbers to see what makes sense to you where your comfy zone is where to enter that trade based on how far away that candle is away from the crossover of the moving averages, all right, so here is like a cross over here it’s alright it’s not too far away from each other and it keeps on going up you see, if I can find one where the crossover actually appears quite far away from each other here is one here you see like see how far away it is where they actually crossover, and then eventually the market doesn’t really know what to do go sideways for a little bit, and then it goes back up alright, so, if we found a signal like here is one here it’s not really a great signal, but look how far away it is and he went sideways for a bit before the side and the go up that’s like an indecisive error you don’t really want to get into those client signs, because you’re more or less gambling with the market alright here’s another example perfect example this is the one what you’re looking for where they all move over at the same time, and then they go then BOOM upper goes when you see that these moving averages what happens like I mentioned before, if it’s a big downtrend then it starts to go back up again you’ll see the other moving averages kind of crossing over at different times, all right you want to all cross over right side a bang on at the same time, and then have the candles be from a position where it’s coming you know more lessons Lisa angle like less steep angle trend like here like how it moves abruptly down, and then eventually takes a while for it to cross over here’s across there and there’s across there, but it’s too far away we want something where the market is basically started to relax after a big move like this and it’s gone kind of like sideways for a bit, and then it had been bit of range before it starts to take off, and then all the other moving averages start to line up and that’s when, you need to get in like you can see here is where the big move was on this way down and, because the move was, so fierce the moving averages couldn’t really line up with each other at the same time until the market starts to basically try and work out where it’s at you see some fighting going on, and then it starts to sort of go sideways for a little bit just a little brief consolidation, and then the market goes back up I mean this area here could be in a demand area, all right, so we could have used that you know in that favor as well, so be very cautious when you opening trades and try and make sure that they are as close to the moving averages as possible like this one here is no good, all right it’s not how close they are to its left always right is how close it is from its bottom or from its top, all right here is where it crosses over there how far away is it here is one where it crosses over here, but it you know that’s where the candle is right down here, if you went short on that you wouldn’t made any money, all right, if you weren’t sure basically on here you would have made a little bit, because it’s actually happening right on that candle, so be very cautious on how you approach those, all right, and then just try it and ensure that when you see the signal, if you see all three lines cross over at the same time try and see, if you can find one where the positive and directional index cross over at the same time as well, because that’d be a good trade, if you only see two lineup only make sure that it doesn’t matter where actually crosses you just want to see this red line or the green line above the 30 line, all right and sometimes preferably to have this ADX line as well crossing the negative or the positive direction or index when there’s only two when you see all free and they line up all together again that’s great that’s another good example to get in as well, all right, so I’ll leave you with that video, and I will see you very soon in the next one bye for now.

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