The ADX measures the strength of the trend. So why would the opposite of a trend getting stronger be a trend that's getting stronger? Or conversely, a trend that's getting weaker be a trend that's getting weaker?
hankeys - Ok, I'll take your word for it. Would your same logic apply to ATR rising/falling? AvgVolume rising/falling? Momentum rising/falling? I noticed these signals are used as their own opposites as well.
Yes, and that´s correct (I reported this a while back it was wrongly implemented, it was the way you suggested it back then, but that´s not an error!). ADX, as well as Momentum and ATR just measure the strength of a trend / size of a range. You can´t make useful buy / sell decisions on such a indicator, at least not opposite ones. For example: if ADX rises, it means that the trend is getting stronger, but ADX does not indicate the actual direction of the trend! It rises nevertheless if the market is rising OR falling. So saying "Buy when ADX rises" and "Sell when ADX falls", makes no sense, since it has no bias for any market direction and hence such an opposite signal would be a wrong logic. ADX is used as a confirmation indicator only, combined with other ones, and that´s how SQX generates strategies that make use of it, which is perfectly correct. The same goes for ATR, it just measure the volatility of the market, nothing more, it increases when the market falls and when it raises, it is not intended to make a buy / sell decision, it´s an supporting indicator only as well, anything else makes no sense, I think you´ll agree. Same for Momentum. So everything is correctly implemented in SQX in these regards.
Thank you, geektrader. Yes, as I started using it for my purposes, I realized that there was no algorithm that made sense with reversing the ADX. I assume the same is true for the others referenced.