ADX: Measuring How Strong a Trend Is, Not Which Way It Goes
The Average Directional Index, another of Wilder's creations, measures trend strength on a scale from 0 to 100. It says nothing about direction, only how strongly price is trending in whichever direction it is going.
A common reading is that below 20 suggests a weak or absent trend, and above 25 indicates a trend worth trading. Very high readings, above 40 or 50, show a powerful trend, though also one that may be mature.
This is the missing piece for many strategies. Trend-following methods work well when ADX is rising and above 25. Range strategies work better when it is low. Using the wrong approach in the wrong regime is a common cause of losses.
ADX is built from two other lines, +DI and -DI, which compare upward and downward movement. A crossover of the two lines is sometimes used as a directional signal, though it lags.
Like any smoothed indicator, ADX lags. It often confirms a trend after it has been running for a while, and a falling ADX does not mean the trend is reversing, only that it is weakening.
A useful use is as a filter, a switch between modes, not as a signal.
Practical step: mark periods on your chart where ADX was above 25 and below 20, and record how your usual setup performed in each.
ADX: Measuring How Strong a Trend Is, Not Which Way It Goes
Re: ADX: Measuring How Strong a Trend Is, Not Which Way It Goes
A practical tip: watch the slope of ADX as much as the level. A reading of 25 that's rising is a strengthening trend. A reading of 40 that's falling is a trend losing steam. The direction of the line tells you more than the number alone. A falling ADX doesn't mean price will reverse. It often means the market is moving into a range or a slower grind. That's useful for choosing between strategies. When ADX is rising above 20 or 25, trend continuation setups make more sense. When it's below 20 and flat, range trading at the edges tends to work better. I'd check it on the timeframe you use for your bias, not your entry chart.
It’s Fairman 
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LondonNewsTrader
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Re: ADX: Measuring How Strong a Trend Is, Not Which Way It Goes
ADX has a quirk on intraday charts that matters if you use it as the mode switch: a single release candle can lift it from the teens to above 25 within a few bars, because the directional movement on that one bar is so large. The reading then says "trend" when what really happened was a one-off repricing, and the next hour is often a choppy range while the market digests the number.
If you trade the M5 or M15, check how much of a high reading comes from one bar before trusting it, or simply ignore the filter for the first hour after high-impact data. On H4 and above the effect is much smaller, which fits your point about using it as context rather than a trigger.
If you trade the M5 or M15, check how much of a high reading comes from one bar before trusting it, or simply ignore the filter for the first hour after high-impact data. On H4 and above the effect is much smaller, which fits your point about using it as context rather than a trigger.
Re: ADX: Measuring How Strong a Trend Is, Not Which Way It Goes
ADX doesn't tell you direction, so I pair it with something simple like price above or below a moving average. ADX says there's a trend, the average says which way. Neither alone is enough. The DI lines that come with ADX also show direction, with DI plus above DI minus suggesting buyers in control. Another useful detail is that ADX turning down from a high level, above 40 for example, often means the trend is pausing, not reversing. It's a good moment to tighten stops or take partial profits rather than to enter fresh positions.
It’s Fairman 