Anybody who’s ever traded with me before will tell you that I’m a big advocate of going in the direction of the main trend… not against it!
Even if a trade goes against me (which of course happens from time to time), it tends to head toward the main trend at some point. What I mean by that is going in the direction of the trend from the beginning can save an ugly trade, and even put the odds in your favor.
So that’s the side I like to be on at all times…
In this video, I thought it’d be beneficial for me to show you how to use the ADX indicator to find the strongest trends, and determine if the asset or market I’m trading happens to be trending in one direction or choppy.
How to Use the ADX Indicator to Find Trending Stocks to Trade
The average directional movement index (ADX) is an indicator that helps traders measure the overall strength of a trend.
But before I show you how to use the ADX indicator, let me show you the main issue most traders have right now…
Take a look at this chart of Marathon Oil Corp. (NYSE: MRO):
It’s an oil company that made an all-time high on March 8.
But then you’ll notice that MRO started to trade lower shortly after that, and which direction was its 50- and 200-day moving averages going?
Still moving higher!
So if you’re not using the ADX and just looking at these two indicators, it looks bullish.
What I’m trying to say is that the ADX is a much better indicator in terms of finding closer-term price action for a trend because it doesn’t lag behind the market.
It’s a great indicator to find a good, short-term trending market without a lot of lag.
Check out my short video below to learn how to use the ADX indicator to find trending stocks to trade.
Don’t forget to like and subscribe to our YouTube channel if you haven’t already so you can be notified as soon as we post our next video and see what other trade opportunities we’re paying close attention to!
P.S. Unlike traditional strategies, there’s a weird market “glitch” that allows traders to
take advantage of stocks that may be heading absolutely nowhere…
Many traders have never even heard of this, but it’s one of Wall Street’s favorite tricks!
For a long time, it wasn’t something the average investor was able to participate in…
But it was a way for the rich to get even richer, no matter which way the market was headed.
However, times have changed, so now anyone can take advantage of this market “glitch” with just their cell phone brokerage account…