Average directional movement index (ADX) is a frequently used indicator, traders determine the strength of the current trend. Adx index that looks similar to the signal. But this does not say that the trend is up or down. High or low values of the indicator does not mean. The trend is bearish or bullish market ADX is speaking or?
Develop indicators by Welles Wilder, the author of a number of indicators: RSI, Parabolic SAR, and described in his book "new concepts in technical trading systems, the.
Before you can use the indicator so that the. Understand how it works, ADX
Description the indicator
ADX is included in the standard set of techniques. You can search for MetaTrader ADX indicator in a separate window, under price chart. That is the third curve: + DI,-DI and ADX + DI and-DI. A line in a group of indicator trends.
- Measure diameter DI + the strength of the trend is up. To demonstrate the power of the buyer. If + DI greater than-DI, superior buyer in the market.
- Line-DI This reflects a tendency down display of the seller. If there is more than +-DI DI dominate the sellers in the market.
- In the current market situation, the ADX indicates a trend or rate in calculating ADX + DI and-DI. ADX growth path The market is likely, since market waterfall.
ADX trend intensified the high growth ADX trend strength means while reduction of the adx index is slow or the potential to develop the next trend.
The parameters of the ADX indicator
By default, the time period for ADX as 14 bar (14 trading days). This value is considered to be the best but of course. You can set a different period. We recommend the use of a value in the range 7-30.
The value of the period affects the response of the price change indicator. A time period previously. ADX will send a signal. However, that may be a false signal. If you decide to increase output, reliability, but they might be delayed.
ADX provides reliable signals in higher time frames. To find an indicator light to confirm. One should use a time frame from the H1 and higher.
To check the trend, you should add the reference level, level 2 – 20 and 40 20 40 priority and start of the impulse voltage or slowing.
ADX trading signals.
How to determine the strength of the current trend.
ADX line ranges from 0 to 100, but they rarely rises above the mark. 60 if the ADX moves side 60 currency pairs are overbought or oversold zone is considered a better trading.
The movement of the indicator's lines. Some of the trading signals, signal what they give.
ADX line reflects the strength of the trend: the higher trend lines.
- ADX is less than 20 – the market is surprisingly particularly stand out. We can talk about a period of consolidation.
- ADX between 20 and 40 – indicates the beginning of a trend up or down, and further development. Find a good point.
- ADX is above – 40 are likely strong in the market. When the current trend will start falling ADX often slow.
+ DI and-DI Buy or sell signal path.
The signal to open the location of the crossword + DI and-DI:
- Signal – + DI line across the bottom line on the ADX line rise above di DI.
- Sell signal-DI DI The bottom line is up, add the ADX line side + DI.
Additionally, the adx index to signal the presence of a trend:
- If there is a trend in the market, the distance between the + DI line/DI. ADX lines and expand it.
- If there is a reduction of trading activities. ADX line is reduced and + line/DI DI. Begin to converge
It should be noted that the adx index work better after the integration of the market.
Disadvantages of ADX
Spikes are called drawbacks of indicators. When the market trend moving up or ADX lines begin temporary storage. Not as an indicator to recognize new trends correctly. Can cause such a situation.
Bleep like that impulse will be crisper. Or, which indicates a change in the market trend.
Chart of the currency pair has a little slow. Or go and index adx decreased/show strong tendency then.
After the Spike formation, it is difficult to understand that the market still has a tendency, or should we wait for a better situation.
Another drawback of this indicator. Operation is delayed by ADX ADX can miss the point of this usually begins after you have started the trend.
MACD trading strategy – and the ADX
Traders often use the ADX, in conjunction with other technical indicators. Today I will tell you how to usethe MACD and a lonely ADX.
We already know the index adx trend strength while MACD shows the direction of the trend.
MACD zero line graphs of the main signal for the market. Confirming the trend, we use the adx index ADX, MACD is a good strategy to apply for currency pairs and timeframes. H1 's and higher.
When open purchase orders.
MACD buy signal graph. That is, it crossed the line from the bottom upwards. If the + DI line is above the movement. If the DI is not satisfied these conditions, is not interested in these signals and waiting for the right moment.
When you open the sales order.
MACD sell signal graph that it crossed the center line from top to bottom. Line-DI is above + DI line if the line is the bottom line, but DI signal MACD DI + one sales position open.
Therefore, measuring the "average directional movement index" in order to enable the seller to make sure. There is a trend in the market. This indicator is used to assess the strength of the current trend. Because of the ADX is delayed. Seasoned traders Guide Used in conjunction with other indicators like MACD MACD, ADX, the signal format.