Average Directional Index (ADX)


ADX Quick Summary

It stays below 20 levels – there is no trend or tendency is weak.
It’s going up to 20 levels – the trend is strong.
Passing 40 levels – the trend is extreme for ADX.
Price is rising – the trend is getting stronger, falling – the trend is getting weak.
+ Dives at the top of DI -DI – the uptrend is the same.
-I remain at the top + DI – downtrend is in place.
Two di cross – Trend is changing.

Related: Stochastic Indicator, click here

How to Read the Average Directional Index

The Average Directional Index indicator has 2 lines: ADX only (white), + DI (green) and -DI (red). Merchants then need to draw a horizontal line at the level of 20. All the readings of ADX, which are below 20, suggest a weak and obscure tendency, while the reading above 20 indicates that a trend has picked up.
That is, basically, the simplest explanation of ADX’s purpose. ADX allows foreign currency traders to determine whether the trend is strong or weak and choose the appropriate strategy to do business in this way and choose: After a strategy or a significant value change, consolidation with market changes A strategy for
An additional line to be added in the ADX Indicator window – at level 40.

Related: Relative Strength Index (RSI) , click here

How To Trade With Average Directional Index

If ADX is traded below 20 – there is no trend or tendency was weaked, thus a non-trend – the following strategies should be used, otherwise, there may be losses as a result of false signals and whip.
If ADX’s business is above 20 but below 40, then it is time to implement the following methods.
When ADX reaches the level of 40, it suggests an overbought/oversold (on the trend basis) position on the market. It is time to protect some profits at least the loss of the trick.
When ADX passes 40 levels, then it is a good time to gradually start collecting profits, gradually getting out of trades on rallies and sale-captives and protecting the remaining posts with the remaining stops.
ADX – / + DI lines are used to spot entry signals,  All / / + DI crossovers are ignored, while ADX stays below 20. Once ADX is on the peaks above 20, a purchase signal occurs when + DI (green) gets upwards and upward by -DI (red). A sales signal will be the opposite: + DI will cross the side-DI.

Related: Commodity Channel Index (CCI) , click here

Related: How to Choose Stocks For Long Term Investment, click here

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