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ADX - Average Movement Directional Movement Index.
The Average Directional Index (ADX), Minus Directional Indicator (-DI) and Plus Directional Indicator (+DI) represent a group of directional movement indicators that form a trading system developed by Welles Wilder.
Wilder designed ADX with commodities and daily prices in mind, but these indicators can also be applied to stocks and forex.
The Average Directional Index (ADX) measures trend strength without regard to trend direction.
The other two indicators, Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), complement ADX by defining trend direction.
Used together, chartists can determine both the direction and strength of the trend.
This is probably one of my favorite indicators.
The ADX line, the solid line in this case is your ADX.
The positive and negative direction index dictate in which direction the trend is heading towards.
The ADX is your strength indicator.
The greater the volume the stronger the trade, or the potential move in the said direction of the trend.
A volume of 30 or higher is considered a good trade.
Works extremely well in larger time frames. Also works well to work out when to close trades on lower time frames.
Watch the video to understand its complexity, and how I have simplified its use.
Option 1: Download the video (Right-click and save the MP4 file to your computer)
Option 2: Watch the video online
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