Description
The TAC_DMI strategy is based on trading system described in BC Low's article "Identify the Start of a Trend with DMI"; it uses three technical indicators: TAC_ADX, TAC_DIPlus, and TAC_DIMinus. These indicators attempt to identify start and end points of trend, market tops, and market bottoms.
Long Entry signal is generated when TAC_DIPlus clusters below level 10 and its lower line reaches level 5 while TAC_ADX cluster turns down from level 70.
Short Entry signal is generated when TAC_DIMinus clusters below level 10 and its lower line reaches level 5 while TAC_ADX cluster turns down from level 70.
Main signals are accompanied with additional ones indicating that a trend might be emerging or terminating. Signal of possible trend start is given when TAC_ADX cluster turns up from below 30; a stronger version of this signal occurs when the cluster turns up from below 20. The other signal suggests trend termination, it is generated when TAC_ADX cluster turns up from below 70. For a stronger version of this signal, consider level 90 instead. Although TAC_DMI strategy does not add simulated orders upon trend start/termination signals, they are marked on chart and can be used for confirmation of the main ones.
Input Parameters
| Parameter | Description |
|---|---|
adx length1
|
The number of bars used to calculate the first ADX for TAC_ADX. |
adx length2
|
The number of bars used to calculate the second ADX for TAC_ADX. |
adx length3
|
The number of bars used to calculate the third ADX for TAC_ADX. |
di length1
|
The number of bars used to calculate the first plot of both DI+ and DI-. |
di length2
|
The number of bars used to calculate the second plot of both DI+ and DI-. |
di length3
|
The number of bars used to calculate the third plot of both DI+ and DI-. |
tolerance
|
The tolerance coefficient used in cluster identification. Setting this value to zero will define the cluster as intersection of the three lines at a single point. |
|
|
The type of moving average to be used in calculations: simple, exponential, weighted, Wilder's, or Hull. |
Plots
| Plot | Description |
|---|---|
Signal1
|
Additional signals indicating that the trend might be emerging. |
Signal2
|
Additional signals indicating that the trend might be terminating. |
Further Reading
1. "Identify the Start of a Trend with DMI" by BC Low. Technical Analysis of Stocks & Commodities, November 2012.