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Techie Indicators - How to Use the Adx Indicator
The ADX indicator procedures the strength of a trend and can be useful to determine if a craze is strong or weak. High readings indicate a solid trend and low readings indicate a weak craze. When this indicator is showing a low reading then a trading range is likely to develop. Avoid stocks and shares with low blood pressure measurements! You want to be trading stocks that have high blood pressure measurements. Learn more about ADX Indicator.

This indicator represents Average Directional List. On several charting packages you can find two other lines on the chart, +DI and -DI (the DALAM part represents Directional Indicator). Ignore these outlines. Seeking to trade according to these two lines is a great way to lose money! The only thing that we are focused on is the ADX alone.

Note: This indicator measures strong or weak trends. This could be either a strong uptrend or perhaps a strong downtrend. It does not tell you if the trend is up or lower, it just tells you just how strong the existing trend is!

If ADX is in between 0 and 25 then the stock is in a trading range. It is likely just chopping around sideways. Avoid these weak, pathetic stocks! Once ADX gets above 25 then you will begin to see the beginning of a craze. Big moves (up or down) tend to happen when ADX is right around this amount.

When the ADX indicator gets above 30 then you are staring at a stock that is in a strong craze! These are the stocks and shares you want to be trading! You won't see very many stocks with all the ADX indicator above 50. Once it gets that high, you start to see trends coming to an end and trading ranges developing again.

So what is the ADX indicator good for?

This indicator is best used for screening stocks and shares and writing verification. By having this indicator to your scanning software, you can eliminate all of the stocks and shares that are in trading ranges. You may then set up your check to find only those stocks that are in strong uptrends or strong downtrends.

The ADX indicator does not give buy or sell signals. It will, however , give you some perspective on where the stock is in the trend. Low readings and you have a trading range or the beginning of the craze. Extremely high readings tell you that the trend will likely arrive at an end. For more info go to Wendy Kirkland.
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