Switching Between DAX Breakout and Mean-Reversion Trades with ADX

Summary

This strategy applies an ADX regime filter to DAX trading, using breakout rules when ADX is above a chosen threshold and mean-reversion rules when it is below. The accompanying 30-minute example uses ATR-scaled candle bodies to trigger entries. In the low-ADX regime, large candles prompt trades against the candle direction; in the higher-ADX regime, large candles that extend beyond the prior day’s high or low trigger trades in the candle direction. The example also restricts trading hours and disables order accumulation.

The author says the approach was optimized across several timeframes and reports that results looked promising, but supplies no figures or validation details in the text. The entry rules include commented-out stop and target placeholders, so risk exits are unspecified. The threshold and ATR multipliers are example settings, and optimization may not generalize to future market conditions. The author explicitly invites alternatives for distinguishing trending from ranging phases, underscoring that ADX is only one possible regime measure.

Key ideas

• ADX selects between a mean-reversion mode in weaker-trend conditions and a breakout mode in stronger-trend conditions.
• The example scales candle-body thresholds by ATR before triggering entries.
• Breakout entries also require price to exceed the prior day’s high or low.
• The example restricts trading hours, while stop and target orders remain unspecified.
• The author reports optimization across timeframes but provides no performance figures or validation details.

Tags

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