The ADX indicator provides a +DI and -DI chart line.
Both are well explained in MT4 help.
But there is a third chart line in color mint.
What is it, what is it good for and what does it say?
How can it be useful for trading?
This is ADX line.
You can read here:
Forum on trading, automated trading systems and testing trading strategies
Something Interesting in Financial Video June 2016
Sergey Golubev, 2016.06.26 06:59
How To Trade - ADX indicator and How Does It Work
ADX indicator is used to determine the strength of the trend:
You do need to know that:
As the ADX Line is Non Directional, it does not tell you whether the
market is in an uptrend or a downtrend (you must look to price or the
+DI/-DI Lines for this) but simply how strong or weak the trend in the
financial instrument you are analyzing is. When the ADX line is above
40 and rising this is indicative of a strong trend, and when the ADX
line is below 20 and falling this is indicative of a ranging market.
So one of the first ways traders will use the ADX in their trading is
as a confirmation of whether or not a financial instrument is trending,
and to avoid choppy periods in the market where many find it harder to
make money. In addition to a situation where the ADX line trending
below 20, the developer of the indicator recommends not trading a trend
based strategy when the ADX line is below both the +DI Line and the –DI
Sergey Golubev, 2016.06.26 07:07
How To Trade: ADX 50 trend trading strategy (adapted from the article)
Finding a strong directional move is the first priority of any trend
trader. However, when having to select a currency pair to trade, it can
be difficult to identify the best trends. For the ADX 50 strategy we
will be using the ADX (Average Directional Index) indicator for this
process. First, add a 14 period ADX to the 4Hour chart, using Daily
Remember, ADX is not identifying the direction of the trend, only its
intensity. If a currency pair’s trend is weak or if the pair is
consolidating, ADX will read significantly lower than a strong
directional market. For the ADX 50 strategy, we will only be looking
for currency pairs with an ADX value of over 50! If Daily ADX reads over
50, you can then begin to move to the execution phase of the strategy.Once a strong trend is found, it is time to plan an entry into the
market. The ADX 50 trend trading strategy uses an RSI (Relative
Strength Index) indicator with a 14 period setting on a 4Hour chart.
Sergey Golubev, 2016.06.26 22:54
This is very interesting indicator based on ADX:
Simple Trend Visualizer - indicator for Metatrader 4