ADX Directional Movement
ADX Directional Movement is a trend-strength strategy built on Wilder's Directional Movement system.
ADX Directional Movement is a trend-strength strategy built on Wilder's Directional Movement system. It combines two ideas from the same calculation:
- ADX (Average Directional Index) measures how strong a trend is, regardless of direction. A reading above 25 is the conventional "there is a real trend here" threshold.
- +DI / -DI (the positive and negative Directional Indicators) measure which way the trend points. When +DI is above -DI buyers are in control; when -DI is above +DI sellers are.
The strategy enters only when a trend is both strong (ADX > 25) and pointing up (+DI > -DI), and exits on the directional flip (-DI back above +DI).
It is an easy, trending strategy that works on 1H–Daily timeframes and across stocks and forex. Its trade-off: ADX is a lagging, smoothed measure, so entries can arrive well after a move has begun.
How it trades
| Ingredient | Meaning |
|---|---|
| ADX(14) | Trend strength over 14 periods; > 25 means a meaningful trend |
| PLUSDI(14) | +DI, the positive directional indicator |
| MINUSDI(14) | -DI, the negative directional indicator |
Buy (strong confirmed uptrend):
ADX(14) > 25 AND PLUSDI(14) > MINUSDI(14)
Sell (directional flip):
MINUSDI(14) > PLUSDI(14)
When it works best
Good, reliable trend confirmation on names that actually trend hard. Because ADX is smoothed and lagging, it filters out weak, choppy moves well but can enter late and give back some of the early trend. Weakest in range-bound markets, where ADX rarely clears 25 and the +DI/-DI lines cross back and forth.
Backtest this strategy yourself
Build these rules on the Free plan, adjust them, and see how they would have traded.