TUE ADX/MACD Confluence Algorithm V1

2023年2月9日

This algorithm is designed to look at the ADX/MACD confluence for opening conditions, apply various filters including volume and volatility, then determine stop outs, break evens, and take profits.

The ADX and MACD confluence can be a powerful predictor in stock movements. Both of these indicators find trend but do it in different ways. When they're combined they have a high success rate of finding openings. That's done by finding the bar in which both show the same direction - that bar is the beginning of the confluence. I have a free indicator called the TUE ADX/MACD Confluence that you can use to see this in action.

This script will help you find those confluences in an easy to understand manner. It will open a trade on a detected confluence, using the rest of the variables available in the algorithm as filters. You can filter based on cumulative volume delta, volatility, and trend. It includes settings for either trend following or contrarian trades, and the ability to go long, short, or both.

It includes Buy and Sell signals for detected confluences, and will show colored candles to help you determine when to exit a trade if you don't want to follow the included take profit areas. When the candles turn to white that means the detected confluence is no longer in play. The Buy and Sell signals will display on the first occurrence of each confluence.

The take profit areas are based on proprietary math that help find peaks and valleys. You can adjust the size of the take profits as a percentage of the position, change to static take profits (i.e. take profit in 16 ticks), or use both. You can also disable them and use the natural closing conditions (reversal of MACD/ADX confluence).

Our algo works in any market and will allow user to adjust input settings to be used on any ticker they'd like. It is built as a strategy so you can back test on any ticker to find the exact right settings to dial it in and then switch to live trading mode to see signals. Can be used for day trades or swing trades.

Automated Trading

This algo has been tested and certified to work for automated trading.

Works on Forex

It's confirmed to work on forex so you can trade that market.

Gets you into long successful trades, and gets out of poor ones quickly

It keeps you in the long trades taking small profits along the way, but cuts losers quickly in comparison. This style leads to a high profit factor, as you can see over 3.0 in the included ES 3 Min chart.

It looks at many variables so you don't have to

- Uses ADX/MACD confluence for opening/closing conditions.
- It uses volume, if the user wants, to help filter entries. The volume calculation is based off of my proprietary cumulative volume delta indicator and helps find if the volume is moving long or short.
- It uses proprietary take profit math to help find peaks and valleys to peel off profits. It is based on the changes in momentum of the underlying.
- It allows for stop outs and break evens based on volatility so they'll always adjust with the movement of the underlying ticker (see the blue lines above and below the opening in the chart).
- It allows for offset break evens to keep a portion of the profit.

Strategy for the Algo

Included so you can understand how to trade with it.

ONE: After loading this strategy onto a ticker turn off volume if it's a ticker with no volume , set the dates at the bottom to when the stock is active (you want to start backtesting when a stock started trading like it trades currently).

TWO: From there adjust the ADX/MACD to find the highest win rate and profit factor.

THREE: Then adjust the volume length to find the highest win rate and profit factor. It's important while doing these that you pay attention to a smooth upward equity curve.

FOUR: After this has been done now adjust the long and short risk multipliers. This determines your stop out.

FIVE: Then adjust breakeven multipliers - this is the level at which it changes to a breakeven stop out instead of the previous one. You can also set an offset to keep a small part of the profit.

SIX: Finally adjust the take profit sizes.

SEVEN: Once this is all done go back through the list and adjust up and down by one or two clicks and see if a better curve can be obtained. Very frequently long and short trades have different settings.

EIGHT: When you are finished save the settings in a custom indicator template and put it with it's own chart.

Additional

The settings shown on screen are not the default settings, but are settings chosen for this ticker and timeframe based on the process above. Nearly every ticker and timeframe will require adjustment from default, that's why the algorithm is built to be highly flexible. It can fit any ticker and timeframe, as well as market environment.

Also included in the chart above is a $1.25 commission per contract, and a tick of slippage (which on average is about right for automated trading on ES).