Holy Grail frm the book street smarts by Linda Rascke

[astral77]

The following is an extract from the book "Linda_B_Raschke_-_Street_Smarts_-_High_Probability_Short_Term_Trading_Strategies"
It may have legs if coupled with Hanover for H1 or lower Tfs:

"The HOLY GRAIL
just kidding about the title! We named this chapter the Holy Grail because this is one of the easiest patterns in this manual to trade. Based on Welles Wilder's ADX (Average Directional Index) this strategy works in any market in any time frame.
Before we continue, you will need to be familiar with the ADX. Simply stated, the ADX measures the strength of a trend over a period of time. The stronger the trend in either direction, the higher the ADX reading. (If you would like more information about the construction and interpretation of the ADX, we recommend that you read Technical Traders Guide to Computer Analysis of the Futures Market by Charles LeBeau and David W. Lucas.)
When prices make new highs(lows) in a strong trend, you should always buy(sell) the first pullback. The Holy Grail is a precise method we use to measure when to enter a position after a retracement. Once we are in this trade, we are looking for a continuation of the previous trend.
One of two outcomes typically follows. The retest will either fail at the previous high/low in which case a small profit can usually be made. In the second scenario, a whole new continuation leg begins. At the very least, one is offered a very low-risk entry point with several options for managing the exit thereafter.
FOR BUYS (SELLS ARE REVERSED)
1. A 14-period ADX must initially be greater than 30 and rising. This will identify a strongly trending market.
2. Look for a retracement in price to the 20-period exponential moving average. Usually the price retracement will be accompanied by a turndown in the ADX.
3. When the price touches the 20-period exponential moving average, put a buy stop above the high of the previous bar.
4. Once filled, enter a protective sell stop at the newly formed swing low. Trail the stop as profits accrue and look to exit at the most recent swing high. If you think the market may continue its move, you might exit part of the position at the most recent swing high and tighten stops on the balance.
5. If stopped out, re-enter this trade by placing a new buy stop at the original entry price.
6. After a successful trade, the ADX must once again turn up above 30 before another retracement to the moving average can be traded.
"
Kind regards

[effluvium]

The following is an extract from the book "Linda_B_Raschke_-_Street_Smarts_-_High_Probability_Short_Term_Trading_Strategies"
It may have legs if coupled with Hanover for H1 or lower Tfs:

"The HOLY GRAIL ..............just kidding about the title!
[/i][/b]"
Kind regards

Any graphical explanation on charts ?
By the way, could you post an ADX indi ?

[SteveHopwood]

Welcome back, my friend.

[garyfritz]

Welcome back, astral! Whereya been?

I find ADX is a mediocre measure of trend strength. I think rapidly rising Slope (or, equivalently, MACD) is at least as good.