ADX

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Welcome to currency trading with Profiforex!
This video explores the "ADX" trend indicator.
To apply this indicator to the chart, press the "Indicators" button on the toolbar and choose "Trend" -"Average Directional Movement Index" from the menu.

We can then change the settings of the indicator in the window that appears.We can choose the averaging period, method and visualization settings.

When we're choosing the method, we specify the prices to which the indicator will be applied.These are open prices, close prices, maximums, minimums and their different combinations.

ADX is rarely used alone but is mostly used in identifying the condition of the market (trend or flat).

Further, in case of a trend, trend indicators (for example, averages) are used. In case of a flat, oscillators are used - we will speak about them further.

This indicator passed to us from the commodity markets, and in the market Forex it is applied seldom. Nevertheless, it can quite work as addition in different systems of trade.

Falling ADX says about the side market and that it is necessary to enter against the market, using oscillators (such, as Stochastics, MAKD, P Xi Ai).

Growing ADX with value above 15 often testifies about a trend.

On ADX graphics we see three lines. The blue line, is ADX.

Two dotted lines, are, correspondently, DI + and DI-(Directional movement) on which ADX is calculated.

We will dwell on these lines. On a graphic all possible options of relation of the ceiling and minimum prices between two bars and a technique of determination of DI for each of cases are provided.

From result of computation of DI it is possible to draw outputs about trend existence (directional movement) or that absence. It is clear that in the market moving up, DI + will increase, and DI-to decrease.

In the falling market, DI-will increase, and DI+ will decrease.

Each of DI is a measure of directional movement in each side.

In other words, if DI + crosses DI-from below up, in the market bulls are in the lead and the price goes tends to increase.

If DI-starts prevailing over DI +, it means the sellers are in work and the market is ready to move down.

Следовательно, пересечение DI+ и DI- считается сигналом к совершению сделки.