ADX — Average Directional Index

Overview

ADX measures the strength of a trend regardless of its direction, telling you whether the market is trending or ranging — critical information for choosing the right trading strategy. Pair it with the Parabolic SAR for a powerful trend-following combo that filters noise and tightens stops automatically. ADX is equally effective across crypto, stocks, and forex — explore our full indicator guide library to see how it integrates with other momentum tools.

How It Works

ADX is derived from the smoothed averages of the difference between +DI and −DI over 14 periods. ADX itself ranges from 0-100. It's accompanied by +DI (bullish directional) and −DI (bearish directional) lines.

Key Signals

• ADX > 25 indicates a strong trend; < 20 indicates a range-bound market.
• +DI crossing above −DI with ADX rising = strong bullish trend.
• −DI crossing above +DI with ADX rising = strong bearish trend.
• Rising ADX means the trend is strengthening; falling ADX means it's weakening.

Common Mistakes

• Thinking high ADX means bullish — ADX measures strength, not direction.
• Using trend-following strategies when ADX is below 20.
• Ignoring +DI and −DI crossovers — they provide the directional context ADX lacks.