ADX MT4 Indicator and ADX Trade Signals

Created by J. Welles Wilder

This a momentum MT4 Indicator used to determine the strength of a price trend: it's derived from the DMI - Directional Movement Index which has 2 lines.

+DI - Positive Directional Movement Index

-DI - Negative Directional Movement Index

ADX is calculated by subtracting these 2 values and applying a smoothing function.

The ADX isn't a directional MT4 Indicator but a measure of the strength of the trend which has a scale of Zero to 100.

The higher the MT4 Indicator value the stronger the 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 trend is emerging.

Values above 30 signifies a strong trending market.

When ADX indicator turns down from above 30, it demonstrates that the prevailing trend is losing momentum.

ADX combined with DMI - Directional Movement Index Indicator

Since the ADX alone is a directionless MT4 Indicator it is combined with the DMI index to determine the direction of the currency pair.

DMI

ADX and DMI Index

When the ADX is combined with DMI index a trader can determine the direction of the trend and then use the this MT4 Indicator to determine the momentum of the prevailing trend direction.

MetaTrader 4 Technical Indicator and How to Generate Trading Signals

Buy Trade Signal

A buy signal is generated when the +DI is above -DI, & the ADX indicator is above 20

The Exit signal is generated when the MT4 Indicator turns down from above 30.

Buy Signal

Sell Trading Signal

A short signal is generated when the -DI is above +DI, & the ADX indicator is above 20

The Exit signal is generated when the MT4 Indicator turns down from above 30.

Sell Signal