MQL5 - Language of trade strategies built-in the MetaTrader 5 client terminal

Source code library - Expert Advisors, Indicators and Scripts

Buy Expert Advisors in MetaTrader Market and Let Them Trade For You
To post a new code, please log in or register

Interesting script?
So post a link to it -
let others appraise it

You liked the script? Try it in the MetaTrader 5 terminal

2005.12.06 15:10
Average Directional Movement Index, ADX

Average Directional Movement Index, ADX - indicator for MetaTrader 4

| English Spanish Portuguese Russian Chinese

Views:
15954
Rating:
votes: 5
ADX.mq4 (3.89 KB)view


Average Directional Movement Index Technical Indicator (ADX) helps to determine if there is a price trend. It was developed and described in detail by Welles Wilder in his book "New concepts in technical trading systems".

The simplest trading method based on the system of directional movement implies comparison of two direction indicators: the 14-period +DI one and the 14-period -DI. 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.

To these simple commercial rules Wells Wilder added "a rule of points of extremum". It is used to eliminate false signals and decrease the number of deals. According to the principle of points of extremum, the "point of extremum" is the point when +DI and -DI cross each other. If +DI raises higher than -DI, this point will be the maximum price of the day when they cross. If +DI is lower than -DI, this point will be the minimum price of the day they cross.

The point of extremum is used then as the market entry level. Thus, after the signal to buy (+DI is higher than -DI) one must wait till the price has exceeded the point of extremum, and only then buy. However, if the price fails to exceed the level of the point of extremum, one should retain the short position.

Calculation

ADX = SUM ((+DI - (-DI)) / (+DI + (-DI)), N) / N

Where:
N — the number of periods used in the calculation.

Technical Indicator Description

Full description of ADX is available in the Technical analysis: Average Directional Movement Index

Translated from Russian by MetaQuotes Software Corp.
Original code: http://www.mql5.com/ru/code/7955