ADX-Adaptive Bollinger Trailing Stops and Turning Zones

Summary

This indicator combines 20-period Bollinger Bands with a 14-period ADX reading to adjust trailing-stop locations and the width of a possible turning or ranging zone. ADX is scaled and capped to produce a trend-strength factor: stronger readings move the bullish and bearish stop bases toward the band midpoint, while weaker readings leave them nearer the outer bands. The corresponding turning zone narrows as trend strength rises and widens as it falls.

For bullish trades, the suggested stop is the bullish trail, which can ratchet upward while price remains above its base; the bearish trail works in reverse for shorts. The document also suggests treating an expanded zone as a possible range or turning area and avoiding countertrend trades when the trail tightens in a strong trend. It provides indicator logic and usage guidance, but no backtest, market examples, or performance evidence. The behavior depends on the chosen price series and indicator settings, and the suggested signals are not evidence of profitability.

Key ideas

• ADX scales the stop bases and the width of the turning zone according to estimated trend strength.
• The bullish trail ratchets upward when price is above its base and resets to the base otherwise.
• The bearish trail ratchets downward when price is below its base and resets to the base otherwise.
• The document proposes using the trails as dynamic trade exits and expanded zones as possible range or reversal areas.
• No backtest or performance evidence is supplied.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.