ADX


The ADX, or Average Directional Index, indicator can help tell us when a trend is changing.  Often it is used by traders to minimize risk, to ensure that they are trading with a trend and not against it.  Similarly, though we can use this indicator to help us find the start of a new trend.  The ADX is based on moving averages and is essentially a more complex attempt to use MAs.  The index gives a weight that helps quantify the trend.  The basic table looks like this:

0-25 – no or weak trend

25-50 – strong trend

50-75 – very strong trend

75-100 – extremely strong trend