Average Directional Index System

Average Directional Index System

Targeted system was developed by J. Wilder in the mid-1970s, in addition to the parabolic SAR system, and then was advanced by a number of analysts. ADX defines the tendency and shows, whether it is moving fast enough to follow. ADX helps to benefit are still in the middle of important trends.

There are three lines in the indicator chart, following a trend line, positive direction line (+ Di) and a negative direction line (-Di). Blue Line tracks trends, green line (+ Di) is a signal to go long and the red line (-DI) is a signal line to go short. What we do is wait for the blue line (trend line) to rise from below 20 to above the 20th This means that this trend is developed.

Then you will see other lines. When the green line (+ Di) crosses above the red line (-DI), it is a signal to go long. Conversely, when the red line (-Di) crosses above the green line (+ DI), it is a signal to go short.

That's it! So simple.

Recommended period will be "14". This indicator is very simple to use and very profitable. But I recommend you not to use as an indicator signals to exit the market. Try to combine it with a parabolic SAR and you get a great result to your trades.

Good luck.