Volatility and trend strength
Average Directional Index (ADX)
ADX measures how strong a trend is, not its direction, on a 0-100 scale. It comes with +DI and −DI lines that show which side is stronger.
How to read it
- ADX above 25 is usually read as a trending market; below 20 as a weak or sideways market.
- +DI above −DI shows buyers stronger; −DI above +DI shows sellers stronger.
- A rising ADX means the trend is getting stronger in whichever direction.
Settings
Default 14 (DI length) and 14 (ADX smoothing).
Example rule to test
Filter to test: take moving-average crossovers only when ADX(14) is above 25.
Common mistake
Reading a high ADX as bullish. A strong downtrend also has a high ADX.
Try it free on iTradeChart
For learning only. Backtests use past data and do not guarantee future results. Not investment advice.