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Average Directional Index - measures HOW STRONG a trend is, not which direction
The ADX (Average Directional Index) is a trend strength indicator created by J. Welles Wilder. Unlike most indicators, ADX doesn't tell you trend direction - it tells you how strong the current trend is.
Key insight: ADX rises when a trend is strengthening (whether up or down) and falls when price is ranging or the trend is weakening. It's a filter - use trend strategies when ADX is high, range strategies when ADX is low.
The full ADX system includes three lines: ADX (strength), +DI (bullish pressure), and -DI (bearish pressure). The DI lines show direction while ADX shows conviction.
ADX tells you how strong the trend is, not which direction. Combine it with +DI/-DI or price action for direction. ADX above 25 with a clear trend structure is where your best trades live.
Indicators confirm what price action shows. They don't replace it. Never trade based on an indicator signal alone. Always combine with chart structure, pattern recognition, and volume analysis.
The Academy teaches when to use this indicator, when to ignore it, and how to combine it for high-probability setups.
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