Indicator: What Is ADX? Measuring Trend Strength

ADX (Average Directional Index) doesn't tell you which direction price is moving — it tells you how strong the current trend is, on a scale of 0-100. It's almost always plotted together with two companion lines, +DI and -DI, which do show direction. Developed by J. Welles Wilder (who also created RSI, ATR, and Parabolic SAR), it exists to answer the question every other lesson keeps circling back to: is there actually a trend here worth trading?

The Three Lines

• ADX — trend strength. Low ADX means a weak or non-existent trend (choppy, range-bound market); high ADX means a strong trend, up or down.
• +DI (Plus Directional Indicator) — measures upward price movement pressure.
• -DI (Minus Directional Indicator) — measures downward price movement pressure.

The intuition behind the calculation: each candle, the system asks whether price expanded more to the upside or the downside compared to the previous candle, feeding +DI and -DI respectively. ADX itself is then built from the gap between +DI and -DI — when one side persistently dominates the other, ADX rises; when they keep trading places, ADX sinks. That's why ADX is direction-blind by construction: it measures one-sidedness, not up-ness. The default period is 14, as with most Wilder indicators.

Reading ADX Strength

• ADX below 20-25 — weak or no trend. Trend-following signals are unreliable here; range strategies tend to work better.
• ADX above 25 — a trend is developing or established. Directional signals from +DI/-DI become more trustworthy.
• ADX above 40-50 — an unusually strong trend. Ironically, extreme readings often appear late in a move — strength this obvious has usually been running for a while.
• ADX rising — the current trend (whichever direction) is gaining strength, regardless of the ADX value itself.

Two readings that confuse beginners are worth spelling out. A falling ADX does not mean price is falling — it means the trend (in either direction) is losing one-sidedness, often the first sign a trend is flattening into a range (see Trend vs Range). And a high ADX in a downtrend is "strong," not bearish-bad — ADX would read identically for an equally one-sided rally.

Entry Conditions

• BUY — +DI crosses above -DI, ideally while ADX is above 25 or rising through it.
• SELL — -DI crosses above +DI, ideally under the same ADX condition.

The key idea: a DI crossover with ADX below 20 is a low-confidence signal because there's no real trend backing it up. The same crossover with ADX above 25 carries much more weight. In quiet markets +DI and -DI hover close together and cross constantly — the ADX threshold is what separates those meaningless flutters from a genuine change of control.

ADX as a Filter for Everything Else

In practice, most traders use ADX less as a signal generator and more as a permission slip for other tools — it decides which playbook applies:

• ADX above 25: trend tools get the green light — Moving Average crosses, MACD signals, and Parabolic SAR flips are operating in the conditions they were designed for. Oscillator overbought/oversold readings, meanwhile, should be treated as trend strength rather than reversal signals.
• ADX below 20: the reverse — range tactics work (RSI or Stochastic at range edges, fading support and resistance), while trend-following entries mostly buy tops and sell bottoms of the chop.

This single filter — checking one number before choosing a strategy — eliminates a remarkable share of the classic beginner losses described across this series.

A Word of Caution

ADX is a doubly-smoothed, lagging measure of strength — it confirms a trend is underway, it doesn't predict when one will start, and it reacts slowly at turning points: a trend can end and reverse while ADX is still elevated from the old move. It also doesn't say anything about overbought/oversold conditions, so it's usually paired with a momentum oscillator (like RSI or Stochastic) for timing entries within a trend that ADX has already confirmed. Treat its thresholds as guidance rather than physics — 25 is a convention, not a law, and some pairs and timeframes trend cleanly at readings a little below it.

Download the Indicator

This custom indicator plots ADX, +DI, and -DI, with automatic alerts when +DI and -DI cross. It's available for both MetaTrader 4 and MetaTrader 5 below.

How to Install — MetaTrader 4

1. Download the adx-di-alert.mq4 file below.
2. Open MetaTrader 4 → click File → Open Data Folder.
3. Place the file in the MQL4/Indicators folder.
4. Restart MetaTrader 4, then drag the indicator from the Navigator window onto the chart.

How to Install — MetaTrader 5

1. Download the adx-di-alert.mq5 file below.
2. Open MetaTrader 5 → click File → Open Data Folder.
3. Place the file in the MQL5/Indicators folder.
4. Restart MetaTrader 5, then drag the indicator from the Navigator window onto the chart.

Both files are source code — open and review the full code before using it, for your own safety.