ADX indicator in Trading

The average directional index (ADX) is a technical indicator used by traders to determine the strength of a financial security's price trend. It helps them reduce risk and increase profit potential by trading in the direction of a strong trend.


The ADX identifies a strong trend when the ADX is over 25 and a weak trend when the ADX is below 20. Crossovers of the -DI and +DI lines can be used to generate trade signals. For example, if the +DI line crosses above the -DI line and the ADX is above 20, or ideally above 25, then that is a potential signal to buy.