How to Use ADX Indicator for Day Trading? - PowerPoint PPT Presentation

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How to Use ADX Indicator for Day Trading?

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ADX Indicator is used to determine when the price is trending strongly. Here you know the best way to use ADX Indicator for day trading. – PowerPoint PPT presentation

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Title: How to Use ADX Indicator for Day Trading?


1
How to Use ADX Indicator for Day Trading?
  • https//www.investallign.in/

2
ADX indicator
3
ADX indicator True Trend Strength Indicator
  • The ADX (Average Directional Index) is a
    creation from technical analysis legend J. Welles
    Wilder.Trading with adx is help you to reduce
    risk and increased profit chance. How? ADX
    (average directional index) is help to you
    determine price trend strength. As ADX calculated
    based on moving average of price range.  Default
    value of ADX indicator is 14 bars. But trader
    used different bars size based on instrument
    volatility.  ADX plotted as a single line between
    0 to 100. Directional movement indicator (DMI)
    plotted for ADX value.

4
Below ADX value determine directional
strength. You will find from above table that
ADX value greater then 25 indicate strong trend.
Low ADX indicate that value accumulation or
distribution. If price is stable and ADX also
below 25 then its indicate that someone cornering
instrument. Intraday Trader should avoid trade if
ADX below 40.
ADX Value Trend Strength
0-25 Absent or Weak Trend
25-50 Strong Trend
50-75 Very Strong Trend
75-100 Extremely Strong Trend
5
How to Use ADX (Average Directional Index) for
Day Trading?
  • ADX is friend for Day trader. Every day trader
    wants to avoid sideways moment of instrument. So
    golden rule that if adx
  • Moving between 25 to 30 range  its time to break
    out either upward or downward. Trader should
    carefully watch adx value.
  • ADX above 30 and below 50 range its time to
    enter into trade. Once again ADX is indicator
    which indicate price directional strength but its
    doesnt show directional so its supportive
    indicator. Take trade base on your primary
    indicator.

6
  • Falling ADX  its misconception that falling ADX
    means its reversal of directional movement of
    indicator. Falling ADX value indicate that
    weakness of strength in directional movement its
    time to exit from trade not reveral.
  • ADX as a Range Finder indicator  trade hates
    price trade in range. Or non- directional
    movement. If ADX value down from 25 to below 25
    range its indicate that price is side-ways
    moment.
  • After knowing above ADX value used you will
    defiantly feel that its friend for Day trader.

7
Also Read
  • ADX indicator best use with other trending
    indicator such as Swing trading System AFL, Super
    Trend Indicator, Turtle Trading System AFL.
    Please find ADX indicator AFL For amibroker.
  • Which Indicators are the best for Intraday
    Trading?
  • What is Supertrend Indicator? How to Use It

8
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Website https//www.investallign.in/
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