Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.

CLASSIC TECHNIQUES

How The Pros Use Average

Directional Index
Here’s how technicians Charles LeBeau, Paul Rabbitt, and
Linda Bradford Raschke integrate the average directional ADX above 30
index into their trading plans. Longer-term daily chart

by Barbara Star, Ph.D. Bollinger band

w/ 30-unit EMA
ow would you like to look over the shoulders of

METASTOCK (EQUIS INTERNATIONAL)

professional traders using one of your favorite
indicators? Here’s your chance. I spoke with
three well-known traders who put their own RSI
money at risk daily. I asked them to show me
what they do with the average directional index
(ADX), one of the longest-lived and most popu-
lar trend indicators around.
I asked Charles LeBeau, Paul Rabbitt, and FIGURE 1: RABBITT TEMPLATE, XOI OIL AND GAS INDEX. Paul Rabbitt’s screen
template shows both the overall price action and the indicators at the same time. The original
Linda Raschke how they integrate ADX into their own trading template consists of a black background, white price bars, and yellow trendlines. Those
analysis and trading tactics. Here, largely in their own words, colors were changed for this article to provide better contrast.
these traders explain the thinking that guides their decision-
making. Hopefully, some of their strategies might make you
think about how this indicator can improve your trading. surprises, or company developments to form the basis for
selecting buy or sell candidates. Then he looks at his technical
PAUL RABBITT tools. ADX helps determine entry and exit points on preselected
Paul Rabbitt is a well-known quantitative strategist. During securities. “ADX is the accelerator/decelerator in the trading
his 20-year affiliation with the Oppenheimer Co., he created process. ADX does not dictate whether I stay in or out of a
and ran their quantitative department. He also developed the trade,” he goes on to say. “ADX only postpones a sale or
“Q” stock ranking system, a 12-factor stock risk/return model. accelerates a sale or postpones a purchase or accelerates a
He was a senior portfolio strategist when he left the firm in purchase.
1998 to form his own company. Currently, he advises insti-
tutional clients and provides sector and industry forecasts.
Rabbitt’s analyses and investments include stocks, bonds,
ADX above 30
various financial indices, and Spyder sectors. Market com-
ments and quantitative rankings on individual stocks are
available on his Website. (For the URL, see “Related re-
sources” at the end of this article.)
Price down
Rabbitt uses a 14-unit ADX with end-of-day data as a rough trend
gauge of momentum. “I use a very simplistic interpretation of
➞

ADX. If I have a rising ADX, but it is only at the 15 or 20 level,

I consider it a weak momentum situation. If it is above 30, I
consider it a stronger momentum situation. Even if ADX
changes direction, as long as it remains above 30, I regard it
as a momentum situation. And the higher the level, the greater
the strength of the momentum. I don’ t try to refine ADX too
much,” he comments. FIGURE 2: 3COM CORP. ADX above its 30 level indicates a strong trend is in progress. In
this case, the trend is clearly down. Regardless of price direction, in a trending mode, Rabbitt
Entries and exits: Given his background, Rabbitt relies on focuses on the moving averages and disregards all other indicators until ADX moves below
fundamentals, such as earnings announcements, earnings 30. Once below, he would turn to the RSI and Bollinger bands to track price movement.

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 Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.

“My goal is to invest rather than

trade, so I try to slow my activity as
much as I can and stay in situations
as long as I can,” he explains. “What
I am trying to do is create what I
call tax-efficient investment calls.
I am trying to create long-term
capital gains.”

The trading template: Along with

ADX, Rabbitt uses Bollinger bands
and the relative strength index (RSI).
He incorporates these indicators in
a template that offers both a broad
and specific view of the trading
situation (Figure 1).
The left side of the template
consists of a price chart with three
years of daily data. This chart con-
tains support and resistance lines,
trendlines, and one or more mov-
ing averages. The right side con-
tains a tall window split into three
parts: ADX fills the upper portion,
Bollinger bands on price is in the
middle panel, and a 14-unit RSI
occupies the bottom portion. Each
panel on the right-hand side is based
on approximately 100 bars of daily
price data. The Bollinger bands are
formulated using two standard de-
viations above and below a 30-unit
exponential moving average.
“The bands and the RSI provide
a sense of a trading range, and the
large chart on the left gives me
information about both the trading
range and trend,” Rabbitt opines.
“I focus on the support and resis-
tance lines that coincide with the
Bollinger bands. If I can find
Bollinger bands that are close to
the support/resistance lines, I pay
a lot more attention to those.”

Trading with the ADX: Rabbitt

goes on to say, “If ADX is above
30 regardless of direction or be-
low 30 and rising, then I consider
this a trending situation and I am
going to disregard all trading tools.
I am just going to look at the trend
ANDREW VANDERKAAR

of the stock in terms of its rela-

tionship to the 200-day moving
average or some other series of
averages” (Figure 2).

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Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.

If ADX is below its 30 level and either flat or declining,

Rabbitt deems price to be losing its momentum and moving Stay with the
strong trend
into a trading range. “That drives me down to the Bollinger Stay with
bands and the RSI and I would then range-trade the security. If the strong
price is at the top of the Bollinger band and I had thought about ADX trend
selling the stock for reasons based on my quantitative methods,
then this is a very comfortable sell. But if it is at the bottom of
the bands, I am not as comfortable about the sell,” he explains.

Let profits run: “One place that I have found the ADX to be
especially good is when a stock is screaming — really roaring
— and I am getting really nervous because it is just too
strong,” he adds. “I love to take profits on easy money, and
ADX is an objective way of getting through the excitement of
FIGURE 3: SPYDER BASIC INDUSTRIES. The April price breakout caused ADX to rise from
just wanting to reach out there and grab that profit. So if I have a low of 15 to over 50. While the temptation might be to take profits when ADX moves into
a 35 to 50 ADX and a stock that’s up 25% in the last 30 days, my ranges well above 30, sticking with the ascending ADX may prevent an early exit and gain
instinct is to say: ‘It can’t maintain this. Get out and take the extra profits.
profit!’ But staying with ADX will keep me in it.” (See Figure 3.)
“Over the last decade, what is now happening to the
Internet stocks occurred in other sectors. There have been charting screen to call attention to changes in market shifts
rotations into different sectors or industries that have had and market strength. When the ADX is above 30, it turns a
very strong momentum; the biotech stocks did that for a different color than when the ADX is between 20 and 30.
while, the gaming stocks did that as well. I refer to them as the “[Being above 30] signifies to me that there is a strong
tulip sectors†. ADX will keep you in a tulip stock a little trend on the time frame you are looking at. And if the ADX
longer. It probably is one of the best indicators to take the rises high enough, then any reaction should trigger a retest of
emotion out of a really strong stock.” sorts about 80% of the time. It comes from the generic
Rabbitt uses the ADX to signal whether he should be technical analysis principle that momentum precedes price.
trend trading with averages or range trading with RSI and If there is strong-enough momentum, the price extreme is still
Bollinger bands. Others, such as Linda Raschke, take a yet to come,” she opines. (See Figure 4.)
more classical approach. Trading momentum retracements is one of her favorite
strategies. “I like to enter as the price is retracing. For instance,
LINDA RASCHKE if price is in a downtrend and then price starts having a reaction
Linda Raschke, the president of the LBR Group, initially and begins to move up, I will sell while price is moving up
gained recognition for her professional trading prowess in rather than wait for it to top and turn down again,” she says.
Jack Schwager’s The New Market Wizards. Raschke trades
her own funds. She combines classic technical analysis with
tape-reading to trade all futures markets as well as futures
indices and stocks. To learn more about her trading style and
philosophy, visit her Website. (For the URL, see “Related
resources” at the end of this article.)

Consistent parameters: Raschke uses the 14-unit ADX with end-

of-day data. As with her other technical tools, she believes it
important to keep parameters the same for every market and every
time frame. “I have to be able to pull up a chart on the fly or sit down
for my nightly analysis and be able to approach the problem the
same way every time. It’s a consistency thing,” she explains.
She believes that the fewer indicators or steps needed to
ASPEN GRAPHICS

make trading decisions, the better, especially during trading

hours. “You shouldn’t be using such a complex method that
you have to calculate numbers or comprehend something
during the trading day,” she asserts. “You need to reduce your FIGURE 4: ADX DISPLAY. Raschke color-codes the ADX on her charting screen to call
analysis to two or three indicators so you can make a judg- attention to changes in market shifts and market strength. When theADX is above 30, it turns
a different color than when the ADX is between 20 and 30. The original gray backgrounds
ment within a minute with a high confidence level.”
were changed for this article to provide better contrast.

Momentum retracement: Raschke color-codes ADX on her

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Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.

Realizing that no entry strategy will be perfect all the time,

any retracement methodology can be used to help determine
where the pullback area might be — for example, a move
toward a trendline or a moving average. For Raschke, it is a 1 2
price move to its 20-unit exponentially smoothed moving
average. “I like to short price during a countertrend rally
when it is still rising. I need to have the confidence that even

➞
if I short it and it’s still a little bit too early, it will still turn and
come down. With experience and timing, you can minimize
the drawdown.”
But, she cautioned, always buy or sell in the direction of the
trend. “People get far too caught up looking for exact price
points. There’s not a perfect way to find the entry,” she points
out. “The moving average is a proxy for the entry window or
zone. Some aggressive traders might use a shorter moving
average length, such as a five-unit or 10 instead of a 20. They
will trade more often, but their net profit may not be as high.
The 20 moving average might miss a few trades, but average
net profit will be higher.”
Raschke has observed that the execution skill in placing a
trade accounts for 50% of any gain or loss. “The degree of FIGURE 5: UPSIDE HOLY GRAIL. This pattern takes advantage of retracements in a trend
hesitancy involved or the finesse in placing the order makes to make short-term trades once the retracement is over and the trend resumes. Here’s both
a big difference. I use market orders because I don’t want to a 20-unit EMA on the price chart and ADX in the lower panel. ADX located a strong trend in
the daily prices of the June 1999 dollar contract. ADX rose throughout February and into
miss the trade. For instance, there is always a 50-cent spread March before it made a peak and rolled over to the downside at point 1 on the price chart.
in the Standard & Poor’s 500, but I would rather pay that than At that point, price had begun to retrace or pull back to its moving average. The expectation
risk losing the trade.” is that price would retest the high that was made at point 1, which it did at price point 2.

Holy Grail: Momentum retracement forms the basis of the
Holy Grail pattern, one of Raschke’s best-known methods,
and ADX plays a key part in setting it up. The trading rules for
the Holy Grail are simple:
1 The 14-unit ADX must be above its 30 level to signify
that a strong trend is in progress.
2 When ADX forms a top and begins to turn down, look
for a retracement that causes price to move toward its
other method to trigger an entry,” she advises. “I have never
found an edge trading on the turn up of the ADX unless it is
starting from a very low level. ADX contains too much
smoothing, which causes it to lag.”
Using daily data, the frequency of retracement setups on any
given security may only occur once a quarter. “That’s why I look
at several commodities and different time frames. An ADX setup
would occur more often on a 60-minute chart — maybe three
➞

20-unit exponential moving average (EMA).

3 In an uptrending market, look to buy when price falls to
or near the 20-unit EMA†. In a downtrending market,
look to sell when price rises to or near its 20-unit EMA.
4 In a countertrend decline of what had been an upward
➞
➞

trend, place a buy-stop just above the high of the last

declining bar. Use that to take you into the trade. In a
countertrend rally of what had been a downtrend, place
the sell-stop just below the low of the last bar and use 1 2
that to take you into the market.
5 The initial price target objective is a retest of the
previous high/low. At that point, it is necessary to gauge
market conditions and decide whether this was only a
simple retest or a continuation move in the direction of
the original trend. (See Figures 5 and 6.) FIGURE 6: DOWNWARD HOLY GRAIL. The retracement pattern works in any time frame,
as seen in this intraday five-minute S&P 500 chart. Price gapped down early on June 24 and
Raschke uses ADX to identify the initial condition — a remained in a downtrend until the afternoon. ADX rose as price declined and was above its
30 level when it peaked and rolled over shortly after noon. Price had stopped moving down
potential retracement pattern. “It does not function well as a at point 1 and made a rally up to its 20-unit moving average. A trader would have shorted
trigger. Price will always move faster than ADX, so use some at either of the two down arrows and profited as price moved down to point 2.

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Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.

ADX setups a month. If I see one of those ADX-type trades on a

30- or 60-minute chart in any chart, I’ll trade it!”

Chart formation breakouts: Another ADX price pattern

favored by Raschke occurs when ADX drops below 18. This
often leads to sideways price patterns. A different ADX color

➞
appears on Raschke’s screen to signal a potential market
consolidation. “Price bars overlap, which causes ADX to drop
down very low. Whenever there is a lot of price bar overlap,
you start to see a sideways line, such as in classic point-and-
figure charting,” she comments. “Any sideways line will
show up as a classically recognized chart pattern, be it a
rectangle or flag. At that point, you also tend to find price
clustered around the moving averages.” That signifies basing

action within a trading range from which it is possible to draw
support and resistance lines.
“According to classic technical analysis, the longer price
moves sideways, the more likely that the chart pattern will be a
reversal pattern rather than a continuation pattern” (Figure 7).
Raschke continues: “When ADX moves down that low,
you are in a breakout mode; once price breaks out, you could
be in a trend. So, draw your trendline and look for some type
of breakout method. You are probably coming into the end of
the consolidation and you could expect that the next price
move would be a real reversal.
“But,” she adds, “that isn’t always the case. You can’t
predict the direction of the breakout. As a trader, I try to be
prepared for a sharp price move in either direction. The
sideways breakout (as in Figure 7) tells me that the market is
ready to pick up momentum again. An early entry means
more risk because there is less confirmation, but if the trade
is successful, you ultimately could receive a greater reward.”
➞
FIGURE 7: CHART FORMATION BREAKOUT ON THE DAILY DJIA. In the chart formation
breakout pattern, ADX lays well below its 20 level as it did with the DJIA throughout February
1999 and into March. During that time, price was forming a sideways chart pattern. A
breakout from that pattern occurred as ADX began to rise, indicating the potential for a trend.
The potential was realized as price soared from 9500 to 11000. The chart formation pattern
is a riskier trade.
Ready to respond to what the market shows, Linda Raschke
is a tape-reader and a classic technician, but the next ADX
trader focuses on mechanical systems and tends to be more
comfortable with the raw numbers than with charts.
CHARLES LEBEAU
Trader and writer Charles LeBeau has more than 30 years of
trading experience. He is president of a commodity advisory
METASTOCK FORMULA

Risk management: Regardless of ADX method used, risk Here’s the MetaStock formula for the average directional
management is extremely important. “After entering the trade, index (ADX) with decimal point included:
the time frame and price volatility determines the appropriate
Periods:=Input(“Time Periods”,1,100,14);
risk I would be taking. On a five-minute chart of the S&P 500,
I wouldn’t want to risk more than five points from where I PlusDM:= If(H>Ref(H,-1) AND L>=Ref(L,-1),H-Ref(H,-1),
entered,” she says. “But the way the S&P has been trading lately, If(H>Ref(H,-1) AND L<Ref(L,-1) AND H-Ref(H,-1)>
if I were trading from a 60-minute bar chart, the more appropriate Ref(L,-1)-L,H-Ref(H,-1),0));
risk might be 10 points.”
The same criteria apply to stock trades. However, a stock trade DIPlus:= 100*Wilders(PlusDM,Periods)/ATR(periods);
may last two days to two weeks, depending on price volatility
and the trading time frame selected (that is, intraday, daily). MinusDM:= If(L<Ref(L,-1) AND H<=Ref(H,-1),Ref(L,-1)-
Raschke handles risk management of the chart formation L, If(H>Ref(H,-1) AND L<Ref(L,-1) AND H-Ref(H,-1)<
Ref(L,-1)-L,Ref(L,-1)-L,0));
breakouts differently. “I find this type of trade the most
difficult because you are still emerging from a low-volatility DIMinus:= 100*Wilders(MinusDM,Periods)/ATR(periods);
environment. It is often difficult to tell where the noise ends
and the real move begins,” she explains. “But the best DIDif:=Abs(DIPlus-DIMinus);
breakouts work right away. Volume confirms a breakout.”
She advises trading with a degree of leverage (that is, the DISum:= DIPlus+DIMinus;
number of contracts used relative to your account size) that
fits the type of chart formation. Use fewer contracts (lower ADXFinal:= 100*Wilders(DIDif/DISum,Periods);
leverage) on a breakout from a rectangle because the stop
ADXFinal
point is farther away, then on a breakout of a flag formation
—Equis International
where the stop point is closer or more well-defined.

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Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.

and hedge fund company that manages money for both insti-
tutional and individual investors. He is well known for his
work in the development of trading systems. He trades futures
and futures indices. For more information, visit LeBeau’s
Website. (For the URL, see “Related resources” at the end of
this article.)

ADX as a measure of strength: LeBeau uses ADX with end-of-

TRADESTATION (OMEGA RESEARCH)

day data to measure the strength of trends. He and partner

➞
David Lucas have developed many systems that can be imple-
mented under almost any type of trading conditions. “ADX
helps me determine which system to execute. For instance,
when ADX indicates there isn’t a trend, that could point to a

particular system designed to profit from those conditions,” he
explains. “But when ADX tells us there is a strong trend, we
would want to implement another system that would help us
stay with the trend.” He often uses 200-day databars or 50 to
100 weekly data bars to test the system.
LeBeau looks upon ADX as an indicator, rather than a
system. In his view, none of the parameters are sacred. His use
of ADX to measure trend is based on a combination of fluctu-
ating factors that includes length, level, direction, and his own
added component, rate of change.
Length: He sometimes adjusts the lookback length of the
indicator so it can provide better and more timely information.
A shorter length speeds up the indicator and makes it more
sensitive to price movements. “Most of the time, I’m happy
with the default at 14. But for a faster signal, I have used ADX
as short as 10 on daily bars and as short as seven on weekly bars.
Occasionally, I might optimize the ADX by twos up to 18 just
to get an idea of whether a short length or longer one works
better. I’m not looking for any precise number,” he adds.
“Optimizing doesn’t make as much difference as you’d
think. If you want to be more patient and have something more
reliable, you might increase ADX length. Stock traders have
told me they have better results by lengthening it.”
➞
FIGURE 8: TRADING THE ADX FROM A LOW LEVEL. LeBeau finds that very good trades
often emerge as ADX rises from levels below 20. The June 1999 crude oil chart shows that
ADX spent several weeks below its 15 level as crude oil moved down in price. His system
used the rising ADX in March to trigger an entry that got him into the trade early in what
proved to be a highly profitable trade.
Rate of change: LeBeau adds a rate of change element to the
decision-making process. Rate of change pertains to speed.
Normally, it measures the difference between today’s price
and the price x days ago to tell how quickly price is, or has been,
moving. The greater its speed, the greater its momentum.
However, rather than compare price changes, LeBeau com-
pares ADX values.
“The faster ADX is changing, the stronger the trend, regard-
less of what level ADX is at. You are more likely to be getting
into a trend at a lower level rather than waiting until it reaches
a higher level. For example, if I want ADX one point higher than
it was yesterday, it’s better if that happens at 12 rather than
when ADX is at 30. I will be catching the trend earlier,” he
concludes.
Trading rising and declining ADX: LeBeau discovered that
ADX can act as both a setup and a trigger in a trending market.

Level: The original ADX formulation calls for rounding ADX

value to a whole number. However, LeBeau finds it more
useful to include the fractional value in his type of system-
➞

based trading. Watching ADX values progress from 15.12 to

➞

15.26 to 15.33 alerts him to a potential trend sooner and,

conversely, a gradual drop from 15.12 to 14.63 warns of a
➞

continued loss of momentum. He suggests that traders carry

➞

ADX value out to three decimal places and then round it off to
two. (See sidebar for a MetaStock formula of an ADX with
decimal points.)
“The level of ADX tells you where you have been,” LeBeau
➞

says. “For example, we have one bond system designed to pick

bottoms; so we look at ADX to see if the bonds have been in a
➞

big downtrend. We want to trade the long side, but we want to

know where we have been. We have a minimum level that ADX FIGURE 9: ADX AND RSI. When the ADX stops rising as it did near the beginning of March,
must reach while the market is going down to show us there has a new trading strategy may be in order. A short four-unit RSI was added to capture profits
been a sufficient downtrend. Then we look for a turning point during both up and down price movements. A buy signal was generated when the RSI was
to go long.” below 25 and a sell short signal was produced when the RSI rose above its 80 level.

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Stocks & Commodities V17:10 (433-439): How The Pros Use Average Directional Index by Barbara Star, Ph.D.
Initially, he used ADX mainly as a setup condition and moving
average crossovers as a trigger.
“It was good, but it left a lot on the table. Eventually, we
concluded that ADX was more reliable than the moving aver-
age crossovers. Rather than wait for something else to confirm
a move, we were better off going into the trade as soon as ADX
started to rise. So we began using ADX as both a setup condition
and a trigger. It improved our results,” he says.
He finds that an ADX rising somewhere between the 10 and
20 level produces very good trades. (See Figure 8.) Trailing
channel stops — that is, the lowest low of the last x number days
— helps to preserve profit and limit losses.
When ADX stops rising and begins to decline, look for price
moves that are sideways to down. “I use ADX to identify
sideways markets and then implement a system that buys when
oversold and sell when overbought. The ADX level on the June
Treasury bond triggered one of our ‘buy dips-sell rallies’
systems.
“We have been trading both sides of the market for the past
two to three months now, based on the RSI and ADX saying it’s
a sideways market. If the RSI goes above 75, I would be looking
to sell; below 25, I would be looking to go long.” LeBeau varies
the length of the RSI between four and 20, depending on the
length of his trading time frame. (See Figure 9.)
“I’ve also found that some of the best entries occur after a
long price base. The long base brings ADX down to low levels.
The signals that occur from the low levels lead into a trade
where I can catch that breakout. It is often a highly profitable
trade,” he concludes.
Exits and target objectives: ADX does not trigger an exit for
LeBeau, but the ADX level does help with setting profit
objectives. LeBeau uses the average true range (ATR), a
measure of volatility, to set the actual profit targets. Depending
on market conditions, the number of ATRs may range from one
to 12. Smaller profits would be expected when ADX is at fairly
low levels (nontrending) or at extremely high levels (possible
end of trend). “The juicy part is right in the middle; that gives
the biggest profits. In one of our S&P systems, when we are at
that [profitable] 15-30 midrange, we go for a profit objective
that is four ATRs. But when we are on the tails of either side,
where the trend is about to end or hasn’t begun yet, we adjust
our profit target to one ATR,” LeBeau explains.
ATR is a moving target. “You might have one target when
you put on the trade and then once you have been in the trade
for a few days, the market has changed. Sometimes, a market
gets more volatile and you’ll reach what was the profit target
on the very day that you entered the trade. But now, because the
ranges are expanding, it’s telling you that you ought to hold out
for a bigger profit so you increase the number of ATRs.”
Limits of ADX: Every indicator has its weaknesses, and ADX is
no exception. “Imagine that we have a nice long base. We jump
on board when ADX starts rising from a low level. We success-
fully carry this trade all the way up to a high ADX level,
somewhere above 30, and then the market turns down. The
Copyright (c) Technical Analysis Inc.
ADX will start to decline showing an absence of trending
direction, but the price does not have an absence of direction,
it is moving down!
“ADX shows that there isn’t a trend or a direction to the
market and declines because the window of time it’s looking
at includes both an up period and a down period,” LeBeau
avers. “We have to wash all that rising data out of the time
period we are evaluating. I have observed that a 14-unit ADX,
with all its smoothing and other components, is really looking
at more than 30 days of data. I think we may have a bigger
window than we realize. If we wait until ADX starts moving up
again indicating a strong down move, most of that move is
over. We wind up going short near the bottom of the move and
get ourselves in trouble. So you can’t trade every time ADX
rises; you have to take other things into consideration.”
SUMMARY
Three highly regarded market professionals approach the
markets from very different perspectives — Charles LeBeau
from systems development; Paul Rabbitt from quantitative
analysis; and Linda Raschke from tape-reading and classic
technical analysis. Despite their differing mindsets and ap-
proaches, all have found ways to incorporate ADX into their
trading frameworks during both its trending and nontrending
modes. With some examination, there may be a place for the
versatile ADX in your own trading future.
Barbara Star, Ph.D., university professor and part-time trader,
provides individual instruction and consultation to those inter-
ested in technical analysis. She leads a MetaStock users group
and is a past vice president of the Market Analysts of Southern
California.
RELATED READING AND RESOURCES
Connors, Laurence A., and Linda Bradford Raschke [1995].
Street Smarts: High Probability Trading Strategies for the
Futures and Equities Markets, M. Gordon Publishing
Group, www.mgordonpub.com
Evens, Stuart [1999]. “Directional Movement,” Technical Analy-
sis of STOCKS & COMMODITIES, Volume 17: February.
Hartle, Thom [1993]. “The Discerning Trader: Linda Bradford
Raschke,” interview, Technical Analysis of STOCKS &
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†See Traders’ Glossary for definition S&C