The “Average Directional Index” or “ADX indicator” is one of 5 technical trading indicators created by Joe Wells Wilder Jr., which he introduced in his 1988 book, New Concepts in Technical Trading Systems. These trading tools are still widely used today and are functional in a number of different markets. The ADX, in particular, is interesting in that, although it is considered a moving average indicator, it behaves more like an oscillating tool moving between 0 and 100 within the positive range.
But, more specifically, what is the ADX Indicator? The ADX or “Average Directional Index” is a moving average, trend indicator that is primarily used to measure the strength of a directional movement on a security’s price chart. The term “moving average” here implies that the index is derived based on calculations that involve moving averages of price data, and the term “trend” implies that it measures the price trend.
But, as alluded to before, the ADX is different from other moving average indicators. Firstly, it does not visually depict the direction of the trend on its own. Instead, the indicator primarily quantifies the strength of the trend, regardless of whether it be an uptrend or a downtrend, by oscillating from 0 to 100. Additionally, even though ADX has three lines, similar to other moving average indicators, these lines do not behave the same way, and these are not calculated in a manner that is similar to other moving average indicators. In the case of the ADX Indicator, the lines cross and interact with each other to indicate the direction and strength of the trend.
To find out more about this indicator, how it works, and how to use it to trade, check out the rest of this article below.
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Table of Contents
How to Read ADX (Average Directional Index) Indicator?
The ADX indicator has three components, of which one is called the ADX line. This ADX line, in itself, helps investors to determine the strength of a price trend.
However, the overall ADX indicator is able to indicate both, the strength and the direction, of a price trend. This is because, in this indicator, the ADX line is not shown in isolation: it is accompanied by two other lines that help represent the direction of the trend in addition to the trend strength that is shown by the ADX.
To fully understand and interpret the ADX or the Average Directional Index Indicator, it is important for you to familiarize yourself with three topics. These are –
- Construction of ADX (Average Directional Index) Indicator
- ADX (Average Directional Index) Indicator Calculations
- Interpreting ADX (Average Directional Index) Indicator Signals
Now, without further ado, let us dive deep into each of these above-stated topics so that you can in no time start implementing ADX signals into your overall trading strategy.
Construction of ADX (Average Directional Index) Indicator
Structurally, ADX comprises just three components and is an easy to understand indicator. The three components that together constitute the Average Directional Index (ADX) are listed and described as follows –
- Positive Directional Indicator (+DI): The Positive Directional Indicator (+DI) is a line representing the moving average of the difference in price highs from period to period over the selected time period. In essence, this line indicates how the price is moving relative to the positive end of the spectrum.
- Negative Directional Indicator (-DI): The Negative Directional Indicator (-DI) is a line that represents the moving average of the difference between the price lows from period to period over the selected length of time.
- ADX Line: The ADX line itself is a smoothed average of the difference between the positive directional indicator and the negative directional indicator.
Now that we have discussed what the three components that constitute the Average Directional Index (ADX) Indicator are, in the following section let us discuss how you would calculate these on the price chart of a security.
ADX (Average Directional Index) Indicator Calculations
Even though most trading and charting platforms support the Average Directional Index (ADX) Indicator and will automatically perform all behind the scene calculations for you, familiarity with the underlying calculations of the ADX will help you interpret the trading signals produced by the indicator.
Plus, the behind the scene calculations for the indicator are not too complex. Therefore, in this section let us briefly discuss, how you can manually calculate each of the three components of the ADX Indicator.
Positive Directional Index
In simple terms, as also stated in the previous section, the Positive Directional Index is simply the exponential moving average of the difference in price highs from period to period within the selected time range.
The formula for calculating the Positive Directional Index line is as follows –
100 x [{EMA of (+DM)} / ATR]
Where,
- EMA = the Exponential Moving Average
- +DM = the Highest Price in each period over the selected time span
- ATR = the Average True Range
Negative Directional Index
The Negative Directional Index is similar to the Positive Directional Index, except that it is the opposite of it. In layman’s terms, the Negative Direction Index is the simple exponential moving average of the difference in the price lows from one period to the next, within the selected time range.
You can calculate the Negative Directional Index using the following formula –
100 x [{EMA of (-DM)} / ATR]
Where,
- EMA = the Exponential Moving Average
- +DM = the Lowest Price in each period over the selected time span
- ATR = the Average True Range
Average Directional Index
In essence, the Average Directional Index (or ADX) line is the average of the DX over a selected number of periods or trading sessions. DX, in itself, is the average of the difference between the first two lines, the Positive Directional Index line and the Negative Directional Index line, multiplied by 100.
Hence, there are two steps involved in calculating the ADX Line.
First, you calculate the DX using the following formula –
DX = [(+DI) – (-DI)] / [(+DI) + (-DI)]
Where,
- (+DI) – (-DI) = the difference between price highs and price lows from period to period
- (+DI) + (-DI) = the sum of price highs and price lows from period to period
Finally, once you have the DX calculated, the ADX line can be derived using the following formula –
ADX = E [DX / n]
Where,
- E means “the summation of”
- n = the number of periods or trading sessions
NOTE: Under the standard indicator settings, the ‘n’ number of periods over which ADX is calculated is 14 trading sessions. However, depending on your trading conditions, this setting can be adjusted to meet your individual trading needs.
Interpreting ADX (Average Directional Index) Indicator Signals
On relative terms, the Average Direction Index (ADX) is one of the easier to read and comprehend technical indicators. In this indicator, the ADX line itself serves as a signal of momentum or the “strength” of the price trend. It is the line that depicts an oscillation from 0 to 100 in response to the changing strength of the trend.
Based on the reading of the ADX line, you can make the following deductions about the price trend of the security that is being analyzed –
- An ADX value ranging from 0 to 25 indicates that the market is not trending, or that it is currently bound within a range.
- A value of 25 to 50 represents a strong trend.
- 50 to 75 is a very strong trend.
- Finally, 75 to 100 is an extremely strong trend and rarely happens. This trend strength is considered unsustainable because it represents huge changes, possibly characteristic of a bubble that could burst at any point.
With the help of the ADX line, once you have deduced information on the strength of the trend, what you would need next is to understand the direction of the trend.
To deduce information about the direction of the price trend, the Positive and Negative Directional Index lines are used.
- An uptrend is in place when the +DI is above the -DI.
- Conversely, a downtrend is in place when the -DI is above the +DI.
- When the two lines cross, it indicates that a trend reversal is underway.
How Reliable is the ADX (Average Directional Index) Indicator in Trading?
According to J. Wilder’s original work, the idea of using an indicator like the ADX, which specifically measures the strength of a trend, disregarding its direction, has its advantages. When trading using such indicators, you can isolate your bullish or bearish bias for a security, and make more informed trading decisions that are relevant in all market conditions.
With this above-stated logic, ADX can be part of a trading strategy that is “one-size fits all.” However, for ADX Indicator to fit this “one-size fits all” trading strategy, you must compensate for this indicator’s limitation by combining it with other complementary technical indicators, including the ones that J. Wilder introduced in addition to ADX.
In his study of the trading systems, Wilder stipulated that he was yet to find a trading system that could specifically show which commodities to trade and when to trade them. The primary hypothesis behind his study was that by measuring several specific factors, with regards to changes in price levels of various financial instruments over several trading sessions, it would be possible to analyze them for making informed trading decisions regardless of the nature of the trend.
To emphasize his observations, J. Wilder described the following with regards to the shortcomings of various technical indicators that were popularly used back when he conducted his experiment –
- First, he noted that there was an issue with trend following systems under which most moving average trading indicators fall: any profit you made using a trend-following system could be just as easily lost if the trader did not pull out fast enough to beat a period of loss in momentum and sideways movement.
- Then, he noted that an “anti-trade system,” which considered congestion, or in simple terms, an indicator which studied volume as opposed to the trend, would be useful in a non-trending market but would fail in empowering traders to make profitable trading decisions.
To compensate for these above-stated limitations, as a solution, J. Wilder proposed four criteria that a good technical trading system should measure. These four criteria highlighted by Wilder are as follows –
- A directional movement so that securities with high directional movement could be chosen
- Volatility so that commodities with high volatility (which are usually more profitable) could be selected
- A margin to control the level of volatility and measure a limit after which directional movement is no longer ideal
- And reasonable commission rates (profit per trade)
With this reasoning, the ADX is specifically able to measure directional movement but falls short in the area of volatility and in setting a profit target so that reasonable commission rates can be made.
Additionally, there are several points at which the ADX may provide false signals to a trader if used in isolation:
- At less than 25, the +DI and -DI can cross several times, and the ADX will give false signals
- At greater than 50, the strength of the directional movement may not be sustainable. At such readings, a trend reversal may be approaching and the market might be reaching its limit (a bubble may be forming). Entering into a trade after this point could be falling victim to false signaling.
- In a volatile market, the ADX can fluctuate above and below a reading of 25, and this can be another false signal.
Improving Reliability of ADX (Average Directional Index) Indicator in Trading
All advantages and limitations of the ADX (Average Directional Index) Indicator considered, it is a very powerful tool in technical analysis. The indicator can empower traders in making trade decisions irrespective of the market type and trading conditions. But, similar to most other technical indicators, the ADX Indicator must be combined with other complementary tools to improve its reliability and to create a holistic trading strategy using it.
To improve the accuracy of trade decisions made using ADX, the ideal set of indicators to use in combination with it are the ones mentioned in Wilder’s original work. When these indicators are combined together, they are meant to provide traders with a holistic view of the security they are trading, and thus improve the accuracy of their trades.
For example, listed below are several advantages that can be achieved when signals from ADX are combined with the trading signals from other complementary tools –
- False signals generated by ADX can be filtered, and hence the accuracy of your trading decisions made using this indicator can be improved.
- Information on market volatility, that ADX does not provide, can be integrated into your overall trading strategy.
- Optimum trade entry, take-profit, and stop-loss levels can be identified in any market conditions.
- The same overall trading strategy, with minimal adjustments, can be simultaneously adopted in a number of different market conditions.
The most common tools that are combined with the ADX (Average Directional Index) Indicator to improve its reliability are listed as follows –
- Volatility Indicators
- Average True Range (ATR)
- Relative Strength Index (RSI)
- Profitability Indicators
- Fibonacci Retracement and Extension Levels
- Parabolic SAR
- Pivot Points
In addition to these above-listed tools, several other considerations that can help improve the reliability of your trades are as follows –
- Margin Requirement and Commission Cost
- Commodity Selection Index (CSI)
Briefly described below is how you can leverage each of these above-listed tools and considerations that can help improve the reliability of your trading decisions made using the ADX (Average Directional Index) Indicator.
Volatility Indicators
In the words of Wilder, “the paradox is that volatility is always accompanied by a movement, but a movement is not always accompanied by volatility.” Following this line of thinking, an indicator such as the ADX that primarily measures the strength of a price movement will not always give you a sense of volatility in the market.
Volatility measurement is important in understanding the profit potential and the risk undertaking of your trading decisions. Therefore, it is important to compensate for this weakness of the ADX Indicator by using a volatility indicator in combination with it.
The most commonly used volatility indicators with ADX include the Average True Range (ATR) and the Relative Strength Index (RSI).
Average True Range (ATR)
The Average True Range (ATR) measures market volatility by breaking down the whole range of an asset’s price over a period, usually of 14 days. It compares and chooses the highest of three different analyses of the range to give a measurement of volatility.
When used in combination with the Average Directional Index (ADX), the ATR is most commonly used in determining the exit point or take-profit levels for the trades. Traders frequently set a multiple of ATR as the exit point of their trade. In doing so, they can exit the trade before the market becomes too volatile to trade in and still be able to trade in a highly volatile market.
Relative Strength Index (RSI)
Relative Strength Index (RSI) can be used as an alternative to ATR. It is a momentum-measuring instrument that oscillates between 0 and 100, similar to the DX line of the ADX, except that it is able to measure volatility.
To improve the accuracy of the trades that you make using the ADX, you can combine it with RSI on the price chart, and use signals from the RSI to verify that the market is stable enough to trade.
The RSI can measure when a stock is overbought or oversold. At these levels, the financial instrument can be considered too volatile to continue trading in, and therefore these price points typically mark good take-profit or stop-loss levels.
Generally speaking, the ideal trade entry region on the price chart of a security will occur when the RSI is between 30 and 70, the ADX’s DX line is greater than 25, and the ADX’s +DI and -DI are between crossovers.
Profitability Indicators
When trading with the Average Directional Index (ADX), you will quickly discover that determining the most profitable price points to enter and exit trades using this indicator alone is not an easy feast. For this reason, you will need to combine other tools in technical analysis with ADX to complete your trading strategy.
Examples of such tools that can be leveraged to determine trade entry and exit points when trading with ADX include Pivot Points and Fibonacci Retracement & Extension Levels.
Fibonacci Retracement and Extension Levels
Fibonacci Retracement and Extension levels, in essence, are support and resistance lines demarcated by a sequence of numbers known as “Fibonacci numbers”.
As stated above, these levels are generally used to determine the trade entry or exit levels, and strongly complement the trading signals from the Average Directional Index (ADX) Indicator. When using Fibonacci Levels, the market typically tries to retrace the 61.8 or the 78.6 Fibonacci levels in an uptrend and the 38% retracement in a downtrend. in this duo, if you have determined the trend direction and the strength of the trend using the ADX already, you can use the appropriate Fibonacci levels to identify your trade entry and take-profit targets.
In conclusion, by using Fibonacci levels in combination with the ADX, you can sizably improve the accuracy of your trades.
Parabolic SAR
Simply put, Parabolic SAR, also known as Parabolic Stop and Reverse, is a momentum indicator that technical traders use to determine the strength and the direction of a financial instrument’s price trend.
Parabolic SAR complements the trading signals from ADX (Average Directional Index) Indicator and is often employed by technical traders to improve the reliability of trading decisions made using ADX.
Broadly, there are two applications that Parabolic SAR serves when combined with ADX. These are –
- Providing Confirmation Signal: As mentioned above, similar to the ADX Indicator, the Parabolic SAR measures the strength and the direction of a trend. Therefore, when combined with ADX, the indicator can provide a confirmation of the insights produced by ADX.
- Determining Trade Entry and Exits: One of the major weaknesses of the Average Direction Index (ADX) Indicator is its inability to indicate the exact trade entry and exit points that would allow traders to maximize profits. This is where supplemental signals from Parabolic SAR can help bridge the gap. Once you have determined the direction and the validity of a trade, you can leverage a few simple trade entry and exit strategies that leverage Parabolic SAR. This will allow you to maximize the profitability of your trades.
Other Considerations
Now that we have briefly discussed how the reliability of the ADX Indicator can be improved by combining it with complementary indicators. Before jumping to various ADX trading strategies, let us discuss a few other considerations that might allow you to make better trading decisions using this indicator.
Margin Requirement and Commission Costs
One less talked about, but important, concepts in trading is the concept of Margin Requirement and Commission Costs. These concepts are important to consider as ignoring them can negatively affect your profit outcomes.
When these costs are high, your overall profit will be less. After accounting for charges paid in commission, it is not uncommon for traders to lose money even on winning trades. Therefore, for profitable trading, it is important to bake these numbers into your trade’s risk-reward ratio. After accounting for the Margin and Commission Costs, based on your assessment, if the take profit target for a potential trade is not big enough to allow for a favorable return on risk, you are better off not pursuing that trade.
Therefore, in conclusion, Margin Requirement and Commission Costs are important factors that you must bake into your overall trading strategy.
Commodity Selection Index (CSI)
Contrary to what we discussed above, Commodity Selection Index (CSI) is not a tool that is used to improve the accuracy of trades using ADX. Instead, it is a technical indicator that is created using ADX or Average Directional Index as a foundation.
The CSI Indicator, in essence, combines the ADX, the ATR (mentioned above), the margin requirements, and the commission costs to create a complete trading strategy. The first time that ADX was introduced to the trading world, it was introduced as a part of the CSI trading strategy. Therefore, it makes sense to use these combined indicators to form a holistic trading plan that is designed to maximize profitability.
The main downside in using this tool combination is that it is designed for traders who have a high tolerance for risk and a sizable amount of income to invest. In addition to that, CSI is also most efficient in markets of high volatility; while it can be used in a market with sideways action, it may not be worthwhile to utilize it in such trading conditions.
How to Trade Using ADX (Average Directional Index) Indicator?
Now that we have covered the basics around using the ADX (Average Directional Index) Indicator in trading, let us put this knowledge to work and discuss how you can make trading decisions based on readings from this indicator.
There are two reliable trading strategies that one can leverage in making accurate trading decisions using the Average Directional Index (ADX) Indicator. These are –
- ADX Crossover Strategy
- ADX Breakout Strategy
Now, without further ado, let us briefly discuss both these strategies so that you can start implementing them into your overall trading plan in no time.
Trading Strategy 1: ADX Crossover Strategy
ADX Crossover Strategy is perhaps the most popular trading strategy that leverages the Average Directional Index. It works the same way for both – an uptrend and a downtrend.
Described below are the guidelines that you can use for entering trades, setting your stop losses, and determining trade exit points to book profit using this strategy.
Determining Trade Entry
For you to enter a trade using the ADX Crossover Setup, the following set of conditions must be met –
- First, an ADX crossover, which is when the positive directional indicator and the negative directional indicator (the +DM and the -DM) cross, must occur.
- Second, ADX should be above 25, indicating that the trend has strong momentum. This is to guard against false signals.
- Finally, you must note that when ADX is below 20, this signals that price is currently trendless, and it is not a good time to enter a trade.
Once you have determined that the above conditions are met, you will enter a trade using the below-stated guidelines under this strategy –
- If the +DI line crosses above the -DI line and the ADX is above 25, it is a signal to buy.
- If the -DI crosses above the +DI and the ADX is above 25, it can be a signal to either sell or short sell on the asset.
Determining Stop Loss Target
In this trading strategy, you can determine the stop loss levels for your trades by either relying solely on signals from ADX or by combining them with signals from other complementary tools such as the Parabolic SAR.
When determining stop-loss targets using the signals from ADX alone, you can do so by following the below-stated guidelines –
- After a trade has been entered, and without price movement in the anticipated direction another crossover occurs, you can use this as an indication that it is time for you to exit the trade. When these two lines cross again, the idea is that the trend is reversing, so you stop the trade to curb losses.
- In setting up the stop loss using this above-stated methodology, the ADX should still be above 25, indicating that the momentum is still strong.
Even though this above-stated method can be effective in identifying situations where the trade moves against you, one way to confirm this exit and have a more clearly identified stop-loss target is to combine the Parabolic SAR with the ADX indicator in your trading strategy.
Because the Parabolic SAR trails price movement until its trend movement reverses, this indicator will move steadily closer to price until the two crosses. Therefore, under ADX Crossover Strategy, you can determine the stop loss targets for your trades using Parabolic SAR with the following approach –
- Once the Parabolic SAR crosses price, there is an indication that the trend is reversing. You can use this as a sign to confirm the previous trade exit signal generated by using the ADX along and exit your trade to prevent heavy losses at this point.
Determining Take Profit Target
With the ADX Crossover Setups, the take profit targets are best defined using RSI (Relative Strength Indicator). When trading this strategy, you can determine your take profit levels with RSI Indicator using the following guidelines –
- When the RSI breaks and shows a reading below 30%, the market is oversold. If initially, the -DI crossed over the +DI when you entered into trade, you should be in a sell or short-sell position. In this scenario, you would close your trade to book profits, immediately after RSI goes below 30.
- Conversely, if the RSI breaks above 70%, the market is overbought. If initially the +DI crossed above the -DI when you entered the trade, you should be in the buy or long trade position. In scenarios such as these, you would book your profits by closing your trades immediately after the RSI goes above 70 close.
Trading Strategy 2: ADX Breakout Strategy
The Breakout Trading Strategy is focussed on trading after the point when the price breaks out from its existing trading range. From the ADX standpoint, there is a point that marks momentum great enough to translate that a trend breakout has occurred. However, you can also use the price action structures on a security’s price chart to identify breakouts, and it is advisable that you leverage these price action structures in conjunction with the ADX.
Typically, when trading breakouts, technical traders leverage the price action structures on the price chart of a security to visually identify potential trade entry points and then use readings from the ADX indicator to verify or confirm their trade hypothesis.
Described below are trade entry, stop loss setting, and take profit level determination guidelines that you can leverage in trading breakouts using the Average Directional Index.
Determining Trade Entry
With Breakout Trading Strategy, the first step in determining a trade entry is to visually isolate a potential trade entry using various price action structures.
- To do so, there are multiple price action structures, ranging from chart patterns to pricing channels that you can leverage. Many traders are known to leverage envelope indicators such as the Bollinger Bands, the Donchian Channels, the Keltner Channels, etc. for this purpose as well.
- For a breakout to occur from any price action structure or pricing channel that you choose to trade, the underlying security must either be making a new high or a new low, outside the trading range within which the security has recently traded.
Once you have visually identified a potential breakout trade, you can leverage the ADX (Average Directional Index) Indicator using the following guidelines to confirm your trade entry –
- The ADX should be above 40 when the breakout occurs and hold there. At the level of 40, there is usually an indication that the momentum is high, and the price is breaking out into a new trend. That being said, in some highly sensitive markets such as the forex market, some traders believe that 30 can be used to mark the entry zone. (That is not set in stone, so if you, as a trader, are risk-averse or not a fan of speculation, you should stick to 40.)
- If the +Di line crosses above the -DI line and the ADX is above 40, it is a signal to buy.
- If the -DI crosses above the +DI and the ADX is above 40, it can be a signal to either sell or short sell the security.
- Also note that if the ADX reading reaches 50 or above, there is a strong possibility that the asset’s price movement will stall and change direction, so use the Parabolic SAR to mark a change in direction and exercise caution before entering a trade.
Determining Stop Loss Target
Determining the stop loss target for the Breakout Trading Strategy using ADX is similar to the ADX Crossover Setup that we previously covered.
- Place your stop loss at the next crossover of the +DI and -DI lines that occur after entering a breakout trade.
- Similar to the previous strategy, you can also use the point at which the Parabolic SAR crosses price and indicates a potential reversal in price trend as the stop loss target for your trade.
Determining Take Profit Target
Depending on the price action structure that you used for entering a breakout trade, your take profit calculation would vary. Assuming you used an envelope channel indicator to determine the entry for your trade, you can use the following guidelines to determine your take profit zones –
- Using a price envelope in conjunction with the ADX allows you to set up support and resistance levels and measure the movement of price to determine a take profit target.
- For the breakout strategy, assuming an envelope is used, the take-profit point can be put at a distance that is two times the distance that price traveled from the boundary (either the upper or lower boundary) to the breakout point.
Advantages and Limitations of Trading ADX (Average Directional Index) Indicator
Just as with any other indicator or tool used in technical analysis, there are pros and cons to employing ADX (Average Directional Index) Indicator in your trading strategy. To make informed trading decisions using this indicator, it is thus important that you incorporate these strengths and weaknesses of the ADX Indicator into your overall trading plan.
Therefore, in the following sections, we will briefly highlight some key advantages and limitations of trading with the ADX Indicator.
Advantages of Trading ADX (Average Directional Index) Indicator
Listed below are few major advantages of trading with the ADX (Average Directional Index) Indicator –
- ADX Indicator is straightforward to use and easy to interpret.
- It is extremely useful to a beginner who cannot yet identify the highs and lows of a trend correctly.
- ADX Indicator gives you a reading on both, trend direction (with the +DI and -DI) and trend strength (using the ADX line).
Limitations of Trading ADX (Average Directional Index) Indicator
Listed below are the major limitations of trading with ADX (Average Directional Index) Indicator –
- False signaling occurs – When ADX<25, crossovers between the +DI and -DI can occur frequently and can cause confusion and potential losses.
- When ADX>50, it can begin to cause false signaling as the asset could be stalling to change direction.
- The ADX Indicator does not clearly measure volatility on its own and needs to be combined with other indicators to get volatility readings.
- Sometimes ADX only temporarily rises above 25 and then reverts: this is another false signal that may occur.
- It can look like a mess of lines to a beginner: these lines cross and are intertwined, unlike with channel indicators where the lines are clearly spaced out.
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Conclusion
So, to summarize everything, the Average Directional Index (ADX) Indicator is a trading tool that allows traders to quantify the strength of a price movement, to identify the direction of that price movement, and to use this information to determine whether entering into a trade in the market is worth their while. The components of the ADX are primarily calculated using moving average information on the price data. However, irrespective of being derived using moving average calculations, the ADX behaves like a momentum indicator, featuring a line that oscillates between 0 and 100.
In most trading scenarios, it is advisable not to use the ADX in isolation. Instead, you can harness this indicator’s true predictive power by incorporating it into a balanced trading strategy, alongside a complementary indicator that can measure the volatility of the market. Most commonly, ADX is used as a factor that is part of the Commodity Selection Index (CSI), but it can be grouped with alternative indicators to produce similar results as well.
ADX Indicator is great for beginners to incorporate into their overall trading strategy because of its simplicity of usage and ease of comprehension. To start trading using the ADX, keep in mind that it is best to enter trades when the DX line is above 25, and the other two lines have just crossed. But, this indicator is not great exclusively for the new traders. New and experienced traders alike can greatly benefit from incorporating the ADX into their overall trading strategy.
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