How to Use ADX Indicator for Day Trading?

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How to Use ADX Indicator for Day Trading?

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ADX indicator
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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.

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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
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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.

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• 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.

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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

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