What the Heck is ADX ? (And Why You Should Care)
If you’ve ever stared at your forex chart wondering, “Should I jump in or sit this one out ?” — say hello to your new best friend: the ADX, short for Average Directional Movement Index.
Developed by J. Welles Wilder (yep, the same guy who made RSI), ADX is not about predicting direction. Instead, it tells you how strong the current trend is — bullish or bearish, doesn’t matter. It’s like a volume knob for trends: the higher the number, the louder the trend is shouting.
So, What Does ADX Look Like on a Chart ?
When you pop open ADX on MetaTrader 4 or 5, you’ll usually see three lines:
ADX Line (usually white or yellow): This is the trend strength.
+DI (Directional Indicator Plus, usually green): Measures bullish pressure.
–DI (Directional Indicator Minus, usually red): Measures bearish pressure.
Simple? Kinda. Let’s break it down more.
How to Read ADX Like a Pro (or at Least Fake It)
ADX Value Basics:
0 – 20: No trend, market is sleepy.
20 – 40: Trend is waking up. Now we’re talking!
40 – 60: Strong trend. Time to pay attention!
60+: Extreme trend — might be too hot to handle (or about to reverse).
Now here’s the real deal:
If +DI is above –DI, the bulls are stronger — think about buy opportunities.
If –DI is above +DI, the bears are in charge — consider sell setups.
If ADX is rising, the trend is getting stronger.
If ADX is falling, trend might be weakening (even if price still moves).
How to Use ADX for Buy or Sell Decisions
Let’s bring theory into action. Here’s a simple checklist:
For a Buy Setup:
+DI crosses above –DI
ADX is above 20 and rising
Confirm with price action (e.g., breakout, bullish candle)
For a Sell Setup:
–DI crosses above +DI
ADX is above 20 and rising
Confirm with price action (e.g., breakdown, bearish candle)
Bonus tip: Combine ADX with support/resistance zones or other indicators like Moving Average or RSI for even more solid signals.
But Wait… ADX Isn’t Magic
Let’s keep it real — ADX doesn’t give buy/sell signals on its own. It only tells you if the market is trending strongly or not. You still need to make the call (sorry, no free lunch here). Also, ADX tends to lag a bit — it tells you what has been happening, not what will happen.
So don’t go all-in just because ADX hits 50. Use your brain. Or at least your stop loss.
Final Thoughts: Is ADX Worth Using ?
Absolutely yes — if you’re tired of sideways markets or false breakouts, ADX can help filter out the noise. Think of it as your trend confirmation filter.
Just remember:
✔️ Strong ADX = strong trend
✔️ Weak ADX = potential range or reversal
✔️ DI crossovers = directional hints
✔️ Combine it with other tools!
Ready to Let ADX Guide Your Trades?
Next time you’re confused about trend strength, give ADX a chance. It may not be flashy, but hey — sometimes the quiet ones are the smartest in the room.