How to Use ADX Indicator to Trade Stock & Binary Options

The ADX, or Average Directional Index measures the strength of a trend and can be useful to determine whether an asset is currently in a trending market or a ranging market.

The ADX indicator ranges from 0 to 100. An ADX reading of 20 and lower indicates ranging or weak trend. An ADX reading of 30 and above indicates a trending market.

+DI Line & -DI Line

The ADX, or Average Directional Index, is actually a composite average of the +DI indicator and -DI indicator.


Chart showing the ADX (Average Directional Index) Indicator together with the +DI line and the -DI line

The +DI or Positive Directional Index indicator is representative of how strong or weak the buyers of the market are.

The -DI or Negative Directional Index indicator is representative of how strong or weak the sellers of the market are.

As the ADX is comprised of both the +DI and -DI indicators, it does not indicate whether the trend is up or down but simply the strength of the overall trend in the market.

DI Line Crossover Signals


Chart showing the ADX (Average Directional Index) DI line crossover events

When the +DI line crosses above the -DI line, this is an indication that buyers are taking control of the market and traders can look to go long or buy call options.

When the -DI line crosses above the +DI line, this is an indication tht the sellers are taking control of the market and traders can look to go short or buy put options.


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