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ADX is a trend indicator that helps us to identify the correct trend and reduces the risk and increase the profit potential. This indicator is highly used by traders to identify the wind of the trend. This indicator can be used in any market and can be traded at any time frame.
In this article, I will help you understand What is ADX? and How to use the ADX indicator?
What is ADX Indicator?
ADX is the short form of Average Directional Indicator that helps us to identify the strength of the trend. This indicator was developed by J. Welles Wilder, he has also created some great indicators like RSI, ATR & more. The main aim of inventing this indicator was to help traders to identify the strength of a trend whether the trend is strong or weak which helps to make near perfect calls.
This indicator oscillates from 0 to 100 and helps us to identify the trend by using three lines ADX, +DI, & -DI.
How to set up the ADX indicator in Pocket Option?
The best way to understand any indicator is by practising the same in the Pocket Option practice account. Once you signed up you will land on the Pocket Option dashboard click on the indicator and select ADX from the menu.
You can also change the colour and the indicator default timing. However, The indicator works best at the default time set.
ADX Indicator Strategy: How to trade with ADX indicator?
While trading with the ADX indicator we need to focus on three lines +DI, -DI and ADX. When the three lines intersect each other and + DI is above all then it symbols that the market is in an uptrend so, here we should go for a buy trade. Similarly, when the three lines intersect each other and – DI is above all then we should take a sell trade as it symbols a bearish market.
You must be probably wondering, What about the ADX line right? Well, ADX is equally important when ADX is below 20 it signals a zero trend. When the ADX line is above 25 it signals a strong bullish or bearish trend similarly, when the ADX line is above 35 it signals an extreme trend and lots of profit can be made here. While using ADX you can use support and resistance for trade confirmation. When the ADX is above 25 or 35 lines and the candles are near the support level go for buy trade as it signals a bullish trend similarly when the candles are near the resistance line go for sell trade as it signals a bearish trend.
ADX indicator is one of the most accurate indicators that I have seen. It’s really easy to identify the current trend using ADX. However, If you want to attain more awesome results then you should support and resistance for trade confirmation. As I said earlier, no indicator on this planet can give you a100% per cent result However, by a trade confirmation. You can make near-perfect calls.
I hope I have covered everything about the ADX indicator. I will highly recommend you to use and practice the indicator in the Pocket Option practice account. You are always welcome to comment with your thoughts below.