ADX and DMI Trend Entries with Slope and Moving Average Filters
Summary
This strategy uses ADX to screen for trend strength and the Directional Movement Index (DMI) to determine direction. Entries require ADX to be above a key level of 23 and rising over a three-period lookback; DI+ above DI- supports a long, while DI- above DI+ supports a short. A configurable moving average filter, with a 200-period EMA or SMA by default, requires price to be on the corresponding side of the average. Positions close when ADX slope turns negative.
The document gives default indicator settings and published BTC/USDT futures backtest dates and timeframe, but no performance results. Its claims about potential drawdown or profit-factor improvements are not backed by reported measurements. It identifies parameter sensitivity, lag, and possible false directional signals as limitations, and suggests testing stop losses and additional filters. The source applies the moving average condition to both long and short entries when enabled.
Key ideas
- ADX above 23 and rising is used to select stronger trends.
- DMI direction determines whether an eligible entry is long or short.
- A configurable moving average can filter entries based on price location.
- The strategy exits when ADX slope declines, which may lag a change in market direction.
- Published settings do not include evidence of realized strategy performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.