ADX Trend Confirmer [Honestcowboy]

28 Okt 2023

The ADX Trend Confirmer aims to give traders or algorithms a way to confirm a trend before entering a trade.

While the default for ADX is a smoothing factor of 14 and a length of 14 to measure directional strength. In my experience this is a lagging indicator and not the best for confirming if the market is trending.

🟢 What are the methods used for confirming trend in this indicator?

• ADX above x number : By default we use an ADX length of 3 and it's value needs to be above 50.
  
• ADX sloping up ? This will check if the ADX value is higher than that of previous bar, this to confirm that trend is getting momentum and not slowing down.
  
• close>open / close<open : This is to check in which direction the trend is going.
  
• Mid Point : We use a mid-point between highest high and lowest low in a given period by default of 3 bars. Price needs to close above/below this point to confirm direction. We use previous bar mid-point so there is no repainting of the line.
  
• Min bar ratio: How many percent of the bar is the body? A high amount of wicks but not a lot of body can mean indecision (no trend). This to ensure entries are only after a convincing bar.
  

🟢 Extra Info:

Thanks to ZenAndTheArtOfTrading for publishing ZenLibrary which we use in this script.

This is not a strategy on it's own but a building block to add to your analysis.