GBPJPY 4H ADX STRATEGY

The Best ADX Strategy
The ADX indicator trading rules will ensure that you only trade when there is a strong trend on the 5-minute chart up to the daily chart. In this regard, the best ADX strategy is a universal strategy that performs the same, regardless of the time frame used.
Moving forward, we’re going to look for selling opportunities.

Step #1: Wait for the ADX indicator to show a reading above 25.
Before we even look to see if the market goes up or down, we must first wait for the ADX indicator to show a reading above 25. Based on the ADX indicator trading rules, a reading above 25 is signaling a strong trend and the likelihood of a trend developing.
We all know that the trend is our friend, but without real strength behind the trend, the newly trend formed can quickly fade away.
In order to gauge the direction of the trend, we also need to look at the actual price action. This brings us to the next step of the best ADX strategy.

Step #2: Use the last 50 candlesticks to determine the trend. For sell signals, look for price to develop a bearish trend.
No matter of your time frame, we need a practical way to determine the direction of the trend.
By using a sample size of 50 candlesticks to determine the trend we ensure that we trade in the moment of now. We like to keep things simple, so if the price is heading lower during the last 50 candlesticks we’re in a bearish trend.

Step #3: Sell when the RSI indicator breaks and show a reading below 30.
For our entry signal, we’ll be using the RSI indicator that uses the same settings as the ADX indicator settings. Normally the RSI reading below 30 shows an oversold market and a reversal zone. However, smart trading means looking beyond what the textbook is saying.
In a strong trend as it’s defined by the ADX indicator that’s precisely what we want to see. We want more sellers coming into the market.
So, we want to sell when the RSI indicator breaks and shows a reading below 30.

Step #4: Protective Stop Loss should be placed at the last ADX high.
In order to determine the stop-loss location for the best ADX strategy, first identify the point where the ADX made the last high prior to our entry. Secondly, find the corresponding high on the price chart from the ADX high and there you have it your SL level.

Step #5: Take Profit when the ADX indicator breaks back below 25.
The best ADX strategy seeks to only capture those profits resulted from the presence of a strong trend. Once the prospects of a strong trend fade away we look to take profits and wait for another trading opportunity.
To accomplish this we take profits as soon as the ADX indicator breaks back below 25.
An ADX reading back below 25 suggests the prevailing trend is running out of strength.

Note** The above was an example of a SELL trade using the ADX indicator trading rules. Use the same rules but in reverse, for a BUY trade.
Conclusion - ADX Indicator
The best ADX strategy gives us very useful information because a lot of the time, we as traders don’t want to get into something that’s moving nowhere and not trending in a strong fashion. By applying the ADX indicator trading rules one can take advantage of the strength of the trend and cash in quick profits. The bottom line is that the best profits come from catching strong trends and the best ADX strategy can help you accomplish your trading goals.