Thursday, November 7, 2013

The ADX indicator

The ADX indicator measures the strength of a trend and can be useful to determine if a trend is strong or weak. The Average Directional Index (ADX), Minus Directional Indicator (-DI) and Plus Directional Indicator (+DI) represent a group of directional movement indicators. If you're a swing trader or long term investor, using this type of indicator as part of your technical analysis can help to prevent from entering a new long position into weak trending stocks that may be losing momentum and potentially be on the brink of reversing.The only thing traders use the ADX for is an additional filter in their scans, so that they can find stocks that are in strong trends. Trdaers do not even have the ADX indicator on the charts that they look at when they are looking for setups. Since the ADX is already factored into the charts,you don't need it added to the chart itself.
ADX trading indicator