In this video, you will learn about the ADX indicator, and how to use it in your forex trading. This indicator is available on your MetaTrader platform. If you want to measure how strong or weak a trend is, you can use this indicator. It is important to assess the strength of the trend before entering a position using trend trading strategy. Weak trends may not last long and you can avoid entering a position.
So, what is a strong trend according to ADX? A reading between 30 to 50 is considered as a strong trend. Below 25 is considered a weak trend. Above 50 is considered overbought and a correction is likely.
This indicator consists of 3 lines. The ADX indicator itself, the +D, and -D line. When the +D line crosses above the -D line, this is your buy signal. You can take a long position with a stop-loss. When the -D line crosses above the +D line, it is considered a sell signal. You can take a short position. By altering the default setting, this indicator may behave differently from normal. Hence you can test these changes on a demo account before trying out in a live account.