Average Directional Movement Index - ADX Expert Advisor Setup - Setting Up Average Directional Movement Index - ADX Expert Advisor
Average Directional Movement Index - ADX Expert Advisor Setup - Setting Up Average Directional Movement Index - ADX Expert Advisor - A trader can come up with an Average Directional Movement Index - ADX Expert Advisor based on the awesome indicator explained below.
Average Directional Movement Index - ADX Expert Advisor rules can be combined with other technical indicators to come up with other EA Robots that trade using rules based on two or more indicators combined to form a tradingtrade system.
Average Directional Movement Index - ADX Forex Analysis Signals
Developed by J. Welles Wilder
This a momentum trading indicator used to measure the momentum of a price trend: it is derived from the DMI - Directional Movement Index which has two lines.
+DI - Positive Directional Movement Index
–DI - Negative Directional Movement Index
ADX is calculated by subtracting these two values and applying a smoothing function.
The ADX is not a directional trading indicator but a measure of the strength of the market trend which has a scale of Zero to 100.
Higher the trading indicator reading the stronger the market trend.
A value of below 20 indicates that the market is not trending but heading in a range.
A value of above 20 confirms a buy or sell signal & indicates a new market trend is emerging.
Values above 30 demonstrates a strong trending market.
When ADX indicator turns down from above 30, it signifies that the current trend is losing momentum.
ADX combined with DMI - Directional Movement Index Trading Indicator
Since the ADX alone is a directionless indicator it is combined with the DMI index to figure-out the direction of the forex pair.
DMI
ADX & DMI Index
When the ADX is combined with DMI index a trader can figure out the direction of the market trend and then use the this technical indicator to determine the momentum of the ruling trend direction.
Forex Analysis and How to Generate Signals
Buy Trade Signal
A buy signal is generated when +DI is above –DI, & the ADX trading indicator is above 20
The Exit signal is generated when technical indicator turns down from above 30.
Buy Trade Signal
Sell Trading Signal
A short signal is generated when –DI is above +DI, and the ADX trading indicator is above 20
Exit signal is generated when trading indicator turns down from above 30.
Sell Trading Signal
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