The average directional index (ADX) is a technical indicator that quantifies the strength of trends. It can help traders reduce risk and increase profit potential.

ADX is not a directional indicator, only a Trend Strength identifier. Much like the RPM on a car doesn’t tell you the speed, only the force. ADX is the same behind the trend.

Confirmation should be sought by trend-following indicators, such as the Directional Movement Index (DMI) system and its key component, the Average Directional Index (ADX).

Figure 1 – ADX: Example of TR, +DI, -DI, and DX Calculation over 7 bars How To Use The ADX Indicator For Trading Success Oscillators and indicators are popular among discretionary traders for ...

The ADX indicator simply measures the strength of a trend and whether the price is in a trading or non-trading price movement. The ADX indicator by J. Welles Wilder is a wildly popular indicator ...

The ADX indicator can be used to evaluate not just stocks but commodity and currency prices as well. The indicator’s father is J. Welles Wilder, who traded commodities in the 1970s.