Trend-strength indicator
ADX (Average Directional Index)
A trend-strength gauge that tells you whether to trend-follow or stay out.
What is ADX (Average Directional Index)?
The Average Directional Index (ADX), part of Wilder's Directional Movement system, measures how strong a trend is, regardless of direction, on a 0–100 scale. It's most often used as a filter: trend-following systems work better when ADX is high.
How it works
ADX is derived from the +DI and −DI lines, which measure upward vs downward directional movement. ADX itself rises as one direction dominates and falls in choppy, rangebound conditions. Readings above ~25 are commonly treated as a trending market; below ~20 as ranging. +DI above −DI signals an up-trend's direction, and vice versa.
How traders use it
- ▸Trend filter: only take trend signals when ADX is above a threshold.
- ▸Regime detection: low ADX flags ranges where mean-reversion fits better.
- ▸Direction: +DI vs −DI shows which side controls the move.
- ▸Strengthening trends: a rising ADX confirms momentum.
Build ADX (Average Directional Index) without code in Algovex
Algovex exposes ADX with its +DI/−DI lines as a node. Use it as a gate on your entries, e.g. only fire a breakout when ADX confirms a trending regime, then backtest and export.
Key parameters
| Parameter | What it does |
|---|---|
| length | Lookback period for the directional movement (classic 14). |
| threshold | ADX level above which the market is treated as trending (e.g. 25). |
Frequently asked questions
What ADX value means a strong trend?
As a rule of thumb, ADX above 25 indicates a trending market and above 40 a strong trend, while below 20 suggests a range. These are guidelines, backtest the threshold for your instrument in Algovex.