Comparing Moving Averages, ZigZag, ADX, NRTR, and Heiken Ashi for Trend Detection
Summary
This article explains that a trend depends on both the chart timeframe and the period being examined, then compares several ways to classify direction. These include price relative to a moving average, ordered moving-average fans, successive ZigZag highs and lows based on Dow-style rules, ADX directional lines with a strength filter, NRTR, and Heiken Ashi candle color. It outlines tradeoffs: simple moving averages can switch falsely, multiple averages add delay, ZigZag extrema can redraw before confirmation, and ADX smoothing also lags.
The author implements the methods as MetaTrader indicators and tests related automated strategies on EURUSD daily data. The reported outcomes vary: the moving-average strategy is unprofitable, ADX performs better but still has drawdown periods, NRTR is near break-even with defaults, and Heiken Ashi is unprofitable in the described test. Parameter changes can alter results, and the author notes that position management and capital controls could affect performance. The comparison is limited to the chosen instrument, history, settings, and strategy rules; historical trend labels do not guarantee reliable live signals.
Key ideas
- Trend direction can differ across timeframes and analysis windows.
- A closing price above or below one moving average gives a simple but noisy classification.
- Ordered moving averages reduce some false changes while increasing detection lag.
- ZigZag highs and lows support a Dow-style rule, but unconfirmed extrema can redraw.
- ADX directional lines indicate direction, while its main line can filter for trend strength.
- Backtest outcomes differ by method and settings, so the comparison does not establish future profitability.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.