Average Directional Movement Index

J Welles Wilder has developed the Average Directional Index (ADX) to define trend force, whether the trend will develop further or will gradually weaken.

The simplest trading method based on the system of directional movement implies comparison of two direction indicators: the 14-period +DI (yellow) one and the 14-period –DI (Green). To do this, one either puts the charts of indicators one on top of the other, or +DI is subtracted from -DI. W. Wilder recommends buying when +DI is higher than -DI, and selling when +DI sinks lower than -DI.

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