CCI & ADX Will help to find out the phase of the direction of the stock,. you need to use both to filter out the noise. adx rising above 20 will show the trending phase and below it will be trading phase , DI cross over shows the direction of the stock, CCI ( +200 overbought and -200 oversold ) For reference i am uploading chart for Crude oil, which is in a down trend
My opinion about filtering noise in the market is that you should use 2 non correlated method that arrives at same conclusion. When you are using oscilators they are the same type. And about supper trend that that will not give you good risk reward ratio. And you can use two oscilator to confirm each other or when one is failing to detect the chnage in sentiment. And you can use 1:4 ratio time frame to analyze that will filter out some noise like 15 min 60 min 240 min etc. And I know the importance of what I just have told. Hope this will help.
Thanks Kunal for your inputs…
I tried with ADX-25 but not much filtering done still taking many trades and hit stoplosses.
I want to use supertrend as it gives me early access to trend change and give me flexibility to ride more.
But not able to filter out noise…
I am thinking of using 50EMA to double check the trend
BUY : when Close > EMA50 and SuperTrend = BUY
SELL: when Close < EMA50 and SuperTrend = SELL
Hi Satty, I personally dont like ADX. And from your style of trading i assume you want to have a mechanical system. Well thats good but you need to have a perspective about market and need to understand the context of the market then actually you can filter out noise from your indicator.
Some Ideas from my end -
Look for super trend in renko chart
Can use keltner channel and supper trend for filter out some noise.
You can try 10/3 period/multiplier, but i would like to explain a bit about super trend, Super trend is a trend following indicator , it can be comparable to MACD, works better in trending period of stock/index , prone to whipsaws , especially , if multiplier is changed.