ADX (Average Directional Index) by FxPremiere Forex Signals Services on ADX (Average Directional Index).

How many times have you entered into a trend only to find out that it has already run its course and you were too late? Many of the Forex trading strategies that we use help us predict which way the market is trending and whether to expect a bearish or bullish trend, but give little or no indication as to the strength of the trend. Sometimes these forex trading strategies will lead us to enter a trade and that trade will turn out to yield very little income, even though it went in the direction that we anticipated.

Check out our Free Forex Signals Telegram Channel
Trade better, discover more Forex Trading Strategies
Better Still Sign Up For our FX Signals Daily
Read more on Forex News Today
Download our Forex Signals APP

ADX, or Average Directional Index, is a tool that is designed to help us anticipate the strength of a trend to avoid these kinds of situations. In combination with other Forex trading strategies the ADX can allow us to fully understand the trend and thus only enter trades that will yield big profits. ADX trading strategy is not a standalone Forex trading strategy as it only gives an indication as to the strength of the trend. It does not give any indication as to the direction of the trend and for that reason, it must be used along with other Forex trading strategies. US INDEX

What are indices?

Understanding the Average Directional Index is very easy. It ranges on a scale from 0-100, 100 indicating a very strong trend and 0 indicating a non-existent trend. If the ADX is very close to 0, expect a sideways moving trend, meaning the market will not go up or down but rather stay around the same value with small corrections. When the ADX is low it is a good time to consider closing the trade as you don’t stand to make a profit from a sideways moving market. On the other hand, if the ADX is very high, expect a fast moving trend which means that it is probably a good time to enter a trade. Don’t forget, the ADX is only an indication of the strength of the trend and does not indicate whether the price will go up or down.
Values of ADX that are considered high are above 50. Whenever there is a strong trend, the ADX will be above 50. Weak trends are indicated by values under 20 on the ADX scale. US DOLLAR INDEX

This example clearly shows how we can use the Average Directional Index to analyze the trend:

ADX (Average Directional Index)

As you can see, in the first part of the chart there is a very strong bearish trend and the ADX (shown on the bottom) is very high. Once the trend ends, and the market begins a sideways stage, the ADX drops below 20. In this case, using the ADX could have helped us exit the trade when it had reached the end of the trend and not waste our time and resources on currency pairs that are not going anywhere.

Combining the ADX indicator with your other Forex trading strategies can give you just the edge you need to increase your profits. Forex Trading Strategies

No Investment Advice Provided Any opinions, chats, messages, news, research, analyses, prices, or other information contained on this Website are provided as general market information for educational/informational and entertainment purposes only, and do not constitute investment advice. The Website should not be relied upon as a substitute for extensive independent market research before making your actual trading decisions. Opinions, market data, recommendations or any other content is subject to change at any time without notice. FxPremiere.com, will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or reliance on such information. We do not recommend the use of technical analysis as a sole means of trading decisions.

We do not recommend making hurried trading decisions. You should always understand that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.U.S. Government Required Disclaimer - Stocks, Options, Binary options, Forex and Future trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the stock, binary options or futures markets. Don't trade with money you can't afford to lose especially with leveraged instruments such as binary options trading, futures trading or forex trading. This website is neither a solicitation nor an offer to Buy/Sell stocks, futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. You could lose all of your money fast due too: poor market trading conditions, mechanical error, emotional induced errors, news surprises and earnings releases. End of U.S. Government Required Disclaimer.

Any information communicated by FxPremiere is solely for educational purposes. The information contained within this website neither constitutes investments advice nor a general recommendation on investments. It is not intended to be and should not be interpreted as investment advice or a general recommendation on investment. Any person who places trades, orders or makes other types of trades and investments etc., is responsible for their own investment decisions and does so at their own risk. All results and performance figures stated by us are estimates, hypothetical in nature and do not represent evidence of actual results achieved. It is recommended that any person taking investment decisions consults with an independent financial advisor. FxPremiere.com is for educational purposes only, it is not a financial advisory service, and does not give financial advice or make general recommendations on investment. Please click on the terms and disclaimer links to read further.

ALL PAYMENTS ARE RECURRING AUTOMATICALLY. TO CANCEL PLEASE EMAIL US ON [email protected]