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2008issue C091-4

A holding-matched market lens from averages and directional-line crosses

Before capital is committed, a single familiar chart can sort a name into watch, act now, or ignore. Keep a holding-matched-window, a short simple moving-average, longer exponential averages, and directional-line crosses you can justify, then inspect entry, exit, and abstention as one checklist-process.

  • A market-lens is a single familiar chart that sorts a name into watch, act now, or ignore before capital is considered.
  • A six-month daily candlestick window with volume can serve as a holding-matched-window when the intended stay is measured in months.
  • Keep a 10-day simple moving-average, 20-, 30-, 50-, and 200-day exponential averages, and directional-line crosses only when each overlay fits the holding period and has a stated purpose.
  • Lock the same overlays into a checklist-process so entry, exit, and abstention are inspected together before a position is considered.
Entries in this reading3 entries
Pre-trade checklist43 readingsCurrent trackAverage Directional Index71 readingsMoving average449 readings

A market-lens before capital is considered

Before capital is committed, a single familiar chart can be used to sort a name into watch, act now, or ignore.

Editorial: TradersWeek names that personally justified chart a market-lens. It is used to sort a name into watch, act now, or ignore before capital is considered.

Packing many conflicting overlays onto one display can stall the first action decision instead of clarifying it.

Match the visible window to the holding period

A six-month daily candlestick window with volume can be chosen so the visible range matches a holding horizon measured in months.

Editorial: that visible span is a holding-matched-window, chosen to resemble the typical time a position is expected to remain open.

Keep only the moving averages you can justify

A 10-day simple moving average can mark location versus the prior two weeks, while 20-, 30-, 50-, and 200-day exponential averages can be added so recent observations weigh more than older ones.

Editorial: a moving-average is a lookback mean of price used as a location benchmark. A short simple average can sit beside longer exponential averages that emphasize recent observations.

One documented long-side filter is to abstain when current price sits below the 50-day or the 200-day exponential average.

Each overlay should remain only if it fits the intended holding period and the trader can state what market condition it is meant to show.

Read directional-line crosses, not the ADX value

A directional-movement overlay can be kept mainly for crossings of the two directional lines rather than for the ADX value itself.

Editorial: the average-directional-index is treated as a directional-movement package whose plus and minus lines can be watched for a directional-line-cross. The ADX reading itself is optional. A directional-line-cross is a change-of-character cue when the two directional-movement lines exchange rank.

Inspect entry, exit, and abstention together

The same overlays can be locked into a fixed pre-risk routine so entry, exit, and abstention are inspected together before a position is considered.

Editorial: that routine is a checklist-process. Entry, exit, and abstention are reviewed as one procedure before a position is considered.

Dow Jones six-month daily with a 10-day SMA and a 30-day EMA

On this six-month Dow Jones daily the tape rallies from the winter lows, fails under the May high, and closes back beneath both the 10-day simple average and the 30-day exponential average, so the pre-trade lens is watch-or-abstain rather than size a long. Exact swing prints and the last legend readings were taken from the source chart; the path between those anchors was read from the same daily candlesticks.
On this six-month Dow Jones daily the tape rallies from the winter lows, fails under the May high, and closes back beneath both the 10-day simple average and the 30-day exponential average, so the pre-trade lens is watch-or-abstain rather than size a long. Exact swing prints and the last legend readings were taken from the source chart; the path between those anchors was read from the same daily candlesticks.$INDU · Daily · 2007-12-24T00:00:00.000Z to 2008-06-09T00:00:00.000Z

Holding-matched six-month daily window. Last legend readings: $INDU 12307.35, 10-day SMA 12321.42, 30-day EMA 12517.50. Unlabeled points are approximate reads against the labeled swings and the printed date axis, rounded to 50 index points.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
35 of 56 in the Average Directional Index track
20081-4 pp.Next on Average Directional IndexA nine-cell directional scoreboard for multi-horizon entriesShort, intermediate, and long cells are each marked up, down, or neutral from that horizon's high-low pattern, producing nine readings.
All readings on this track · 56 readings
  1. 1986Cycle-aligned directional trend indicator
  2. 1987What crossover and directional entry rules actually compare
  3. 1988A directional-line cross needs a trend filter, an extreme-point rule, and a dollar stop
  4. 1988Constructing true range by offset addressing
  5. 1988Constructing directional movement from bar range
  6. 1988Average directional index construction: recursive smoothing and lookback offset
  7. 1988Staged Average Directional Index construction with Relative Strength Index confirmation and stop alerts
  8. 1988Average Directional Index construction with frozen true range and directional rules
  9. 1991Constructing the average directional index from range expansion and true range
  10. 1991Constructing five-session forecasts from stochastic, ADX, and MACD inputs
  11. 1993Constructing the average directional index from directional movement and true range
  12. 1993Confirming n-bar breakouts with ADX and DX filters
  13. 1994Constructing a Bollinger band-width trend filter
  14. 1994A pre-trade checklist that can refuse a long three ways
  15. 1997An ADX threshold and a moving average as a trend filter
  16. 1998Regime filters for mutated indicators
  17. 1999Building the average directional index from range extension and true range
  18. 2000Evaluating ADX, RSI, and moving averages in a multi-stock warehouse
  19. 2000Stochastic pop as a filtered continuation setup
  20. 2000Onset and exit from one average directional index
  21. 2002Joint ADX and MACD readout for trend strength and direction
  22. 2003Adaptive Donchian breakout with implied volatility and volume
  23. 2004The average directional index as a regime gate for the relative strength index and the stochastic oscillator
  24. 2004Constructing true-range-specified volume as a directional filter
  25. 2005Constructing a multi-filter penny stock breakout procedure
  26. 2005Construct one playbook that flips with session regime
  27. 2005Combining Bollinger Bands, the average directional index, and Fibonacci retracement on currency pairs
  28. 2006Assembling an adaptive price zone from double-smoothed averages
  29. 2006An ADX strength gate for MACD and the stochastic oscillator
  30. 2007Directional movement as a filter plus trigger
  31. 2007Constructing a veto-first trend permission stack
  32. 2007ADX gates for trend end, range, and reversal
  33. 2008Constructing a nine-cell directional-ratio grid
  34. 2008Average directional index and directional trend indicator lookbacks as trend-filter parameters
  35. 2008A holding-matched market lens from averages and directional-line crosses
  36. 2008A nine-cell directional scoreboard for multi-horizon entries
  37. 2010Building a Vortex Indicator from high-low distances
  38. 2010Constructing ADX, RSI, and MACD price filters
  39. 2011Constructing a volume zone oscillator with a moving-average and Average Directional Index regime filter
  40. 2011A volume zone oscillator conditioned by an Average Directional Index filter
  41. 2011Candlestick names need volume-price, ADX, and moving-average checks
  42. 2012Clustered average-directional-index traces as a trend-start filter
  43. 2012Average Directional Index cluster filters for trend-start signals
  44. 2012Confirming a trend start or turn with a triple ADX cluster
  45. 2013Constructing a late-entry stack from a signed DMI oscillator
  46. 2013A directional oscillator and its stochastic as a stacked timing filter
  47. 2013ADX cluster lookbacks are a locked specification, not a chart label
  48. 2013Combining moving averages, stochastics, and ADX in a daily scan
  49. 2015Assembling the Average Directional Index from directional movement
  50. 2016How an Average Directional Index filter and a breakout entry form one procedure
  51. 2016Score RSI and stochastic crossings only when ADX confirms the trend
  52. 2018Constructing an ADX filter for intraday breakouts
  53. 2018An ADX volatility gate for prior-day breakouts
  54. 2019Exponential deviation bands with a moving average, RSI and ADX
  55. 2020A normalized-slope trend filter from linear regression
  56. 2020Gating volatility-momentum divergences with a Trend filter
By fieldIndicators and filters682 readingsBy year200867 readings
All 71 readings tagged Average Directional Index
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