01Entry idea
+DI cross with strong ADX
A textbook DMI long, gated by ADX above 25 to skip non-trending markets.
TrendExpert Curated · Playbook
ADX
Average Directional Index
A non-directional trend-strength reading, paired with +DI / −DI for direction — the canonical regime filter for any directional system.
ADX is a non-directional trend-strength indicator developed by J. Welles Wilder. It reads 0–100, where below 20 is a weak or no-trend regime, 20–25 is emerging, 25–40 is trending, and above 40 is strongly trending. Pair with +DI and −DI for direction. Most commonly used as a regime filter to gate other directional signals. Default settings: DI length 14, ADX smoothing 14.
ADX, developed by J. Welles Wilder, measures the strength of a trend without saying anything about its direction. It is built from two directional indicators: +DI (smoothed positive directional movement, i.e. how much higher the highs are pushing) and −DI (smoothed negative directional movement). The gap between them, smoothed again, produces an ADX value bounded 0–100. Below 20 means weak or no trend, 20–25 means emerging, 25–40 means trending, above 40 means strongly trending (and often near exhaustion).
The three reading lenses are: the ADX value itself (trend strength), the +DI / −DI cross (directional bias and timing), and the ADX slope (rising = trend accelerating; falling = trend decaying, even if value is still high). ADX is almost never traded standalone — its job is to gate other signals. Pair it with a directional indicator (EMA, MACD, Supertrend) so trend-following entries only fire when ADX confirms a trend is actually present.
Entry ideas
How do I enter trades using ADX?
03ideas
02Entry idea
Trend emergence
An early-regime long that fires when ADX crosses up through the trend threshold from a sleepy range.
03Entry idea
Pullback in confirmed trend
A continuation long that buys pullbacks inside a confirmed strong-trend regime.
Exit ideas
When should I exit a ADX trade?
03ideas
01Exit idea
Directional cross exit
A symmetrical DMI exit that mirrors the +DI cross-up entry.
02Exit idea
Trend strength decay
An early exit that fires when ADX peaks and starts falling, even before the directional cross.
03Exit idea
ADX falls below 20
A regime-exit rule that closes the position when the trend regime itself ends.
Utilities
What else is ADX good for?
03ideas
01Utility
Strong-trend regime filter
A bias filter that gates any directional entry on whether ADX confirms a trend is present.
02Utility
Range detector for mean-reversion
The inverse use of ADX: gate mean-reversion entries to range regimes only.
03Utility
ADX-scaled position sizing
A volatility-aware sizing rule that scales position size with the strength of the trend.
How do I read ADX?
- ADX below 20 = weak trend or range regime. Directional strategies (trend-following) struggle; mean-reversion strategies (RSI, Bollinger) tend to work.
- ADX between 20 and 25 = emerging trend. A cross up through 20 is the earliest reliable signal that a trend regime is starting.
- ADX between 25 and 40 = trending regime. Directional strategies have their highest hit rate here. Most trend-following systems concentrate position size in this band.
- ADX above 40 = strongly trending and often near exhaustion. Counter-trend entries are still dangerous, but reward/risk on new trend-direction entries gets worse — the easy part of the move is usually over.
- Rising ADX = trend is accelerating; positions in the +DI/−DI-aligned direction are winning. Falling ADX = trend is decaying; tighten stops or exit even before the DI cross fires.
- +DI above −DI = directional bias is up. +DI below −DI = directional bias is down. The DI cross is the timing trigger; ADX is the strength filter.
What are the default ADX settings?
| Parameter | Default | When to adjust |
|---|---|---|
| DI Length | 14 | Wilder's original. Lookback for the +DI / −DI smoothing. Shorter (7) gives faster DI crosses on intraday/crypto; longer (21) is smoother on weekly charts. |
| ADX Smoothing | 14 | Wilder's original. Smoothing applied to DX to produce the ADX line itself. Usually matches DI length. Shortening it makes ADX more reactive to fresh trends but choppier; lengthening it makes the regime read more stable but more lagging. |
How do I code ADX in Pine Script?
//@version=5
indicator("ADX Example", overlay=false)
diLen = input.int(14, title="DI Length", minval=1)
adxSmoothing = input.int(14, title="ADX Smoothing", minval=1)
[diPlus, diMinus, adxLine] = ta.dmi(diLen, adxSmoothing)
plot(adxLine, title="ADX", color=color.orange, linewidth=2)
plot(diPlus, title="+DI", color=color.green)
plot(diMinus, title="-DI", color=color.red)
hline(20, "Trend threshold", color=color.gray, linestyle=hline.style_dashed)
hline(25, "Strong trend", color=color.gray, linestyle=hline.style_dashed)Pine's ta.dmi() returns three values in one call — +DI, −DI, and ADX — using Wilder's smoothing internally. Plot ADX in a bold color over the two DI lines so the regime read dominates the eye; horizontal lines at 20 and 25 anchor the threshold bands. Pair the DI length and ADX smoothing inputs to make tuning explicit. Everything you need for a regime filter or DI-cross entry is in those three plotted values.
How is ADX calculated?
ADX is built from two directional movement indicators (+DI and −DI), which are themselves smoothed measures of how much highs are pushing up versus how much lows are pushing down. The ADX line is a smoothed measure of the gap between +DI and −DI, expressed on a 0–100 scale.
- 1.For each bar, compute +DM = max(high − previous high, 0) and −DM = max(previous low − low, 0). Whichever directional movement is larger keeps its value; the smaller is set to zero (only one direction "wins" each bar).
- 2.Smooth +DM and −DM with Wilder smoothing (RMA in Pine) over the DI length (default 14) and divide by smoothed True Range to get +DI and −DI, each on a 0–100 scale.
- 3.Compute DX = |+DI − −DI| / (+DI + −DI) × 100. This measures the directional gap as a percentage — high when one direction dominates, low when they balance.
- 4.Smooth DX with Wilder smoothing over the ADX smoothing length (default 14) to get the final ADX line.
- 5.ADX is non-directional: it only tells you whether a trend is present and how strong it is, not which way it points. +DI vs −DI supplies the direction.
When does ADX fail?
ADX has three classic failure modes.
The first is lag. ADX is the smoothed gap between two smoothed indicators, so by the time it confirms a trend, the trend is already underway. ADX is a terrible early-entry signal in isolation — it confirms regimes, it does not predict them. Always pair it with a faster timing trigger.
The second is high values. ADX above 40 looks like the strongest possible trend signal, but mature trends are usually near exhaustion. New entries when ADX is already extended tend to catch the last leg before reversal. Use rising ADX off a low base, not high absolute ADX, as the bullish trend-strength read.
The third is threshold rigidity. The 20/25 thresholds work across most liquid markets and timeframes but not all. Some highly trending instruments (commodities in a regime, crypto in a parabolic) live above 30 for weeks; others (most FX pairs) rarely break above 25 even during real trends. Tune thresholds to the specific instrument, or use percentile-based thresholds rather than absolute values.
What mistakes do traders make with ADX?
- Treating ADX as directional. ADX measures strength only, not direction. A rising ADX with −DI above +DI is a strong downtrend, not a buy signal. Always read +DI vs −DI alongside the ADX value.
- Using ADX > 40 as a fresh long signal. Extended ADX readings indicate mature, possibly exhausted trends — new entries here tend to catch the reversal. Prefer rising ADX off a sub-20 base as the bullish read.
- Applying fixed 20/25 thresholds across very different markets. Trending commodities can live above 30; some FX pairs rarely break 22. Tune the threshold to the instrument, or use percentile-based thresholds.
- Ignoring the +DI / −DI alignment. The DI cross supplies direction; without it ADX alone is just "there is a trend somewhere." A trade-quality signal requires both: ADX confirming strength and DI confirming direction.
- Using ADX alone instead of as a filter. ADX is rarely a standalone entry indicator — its highest-value use is gating other signals. Trying to trade ADX on its own usually leads back to relying on +DI / −DI crosses anyway, just with extra steps.
How does ADX compare to similar tools?
| Indicator | When to prefer |
|---|---|
| Supertrend | Supertrend gives a single binary regime flip with built-in volatility-adjusted stops; ADX gives a continuous strength reading you can use as a filter. Supertrend for mechanical entry/exit; ADX for gating other systems. |
| MACD | MACD measures trend-momentum and gives directional timing signals (signal-line cross, zero-line position). ADX measures only trend strength and adds direction via +DI/−DI. They complement each other — ADX confirms a trend exists, MACD times the entry. |
| ATR | ATR measures volatility regardless of direction or trend; ADX measures whether that movement is directional. A high-ATR / low-ADX market is choppy and volatile (worst for trend-following); high-ATR / high-ADX is a clean strong trend. |
ADX FAQ
Is ADX a directional indicator?
No — ADX measures the strength of a trend, not its direction. A rising ADX could be a strong uptrend or a strong downtrend; the value alone does not say which. Direction comes from +DI and −DI: +DI above −DI means bullish bias, +DI below −DI means bearish. Reading ADX without the DI lines is a classic misuse.
What ADX value counts as a "strong" trend?
Wilder's thresholds — 20 for "trend present" and 25 for "strong trend" — work on most liquid markets and timeframes. Above 40 indicates a very strong trend that is often near exhaustion. These are guidelines, not absolutes: some instruments run hot (commodities, crypto in parabolics) and others run cool (many FX pairs rarely break 25). Tune thresholds to the instrument when possible.
Should I use ADX or MACD?
They answer different questions. MACD reads trend-momentum and gives directional timing signals — use it to time entries within a regime. ADX reads trend strength and tells you whether any directional signal is worth taking. Most strong systems combine both: ADX as a regime filter (only trade when ADX > 20), MACD or another directional indicator for the actual entry trigger.
Why does ADX lag the trend?
ADX is double-smoothed. +DI and −DI are each Wilder-smoothed over 14 bars, and the gap between them (DX) is smoothed again over 14 more bars to produce ADX. By the time ADX confirms a trend, the trend has usually been underway for 10–20 bars. That lag is the cost of stability — ADX rarely gives false trend confirmations, but it also rarely catches the start of a move. Use it as a regime filter, not an early-entry signal.
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Each entry, exit, and utility rule in the Playbook is hand-picked from established trading literature, validated against historical backtests, and reviewed by the PineWiz team. We add new ideas as we encounter them and refresh existing ones when market behavior or default settings shift. Last review: .
Educational content. Not financial advice.