Quick answer: The average directional index (ADX) measures how strong a trend is, on a scale from 0 to 100, without telling you which way it points. Its job is to help you decide whether a trend-following approach makes sense on this chart right now, not to tell you when to buy or sell.
Our guide to the best trading indicators for beginners leaves ADX out on purpose. A beginner needs a direction before a strength gauge, and ADX only earns its place once you have a strategy it can filter. If you have reached that point and someone has told you “ADX measures trend strength”, this guide covers the next question: what do you actually do with the number?
What ADX Measures and What It Does Not
ADX measures the strength of directional movement over a set number of bars. A high reading means price has been moving persistently in one direction. A low reading means it has not.
It does not measure direction. A strong downtrend and a strong uptrend can both show an ADX of 40. That is why a rising ADX is not a reason to buy, and why ADX works as a filter on another method rather than as a first indicator on a blank chart.
The Three Lines: ADX, +DI and -DI
The indicator, developed by J. Welles Wilder, plots three lines. MetaTrader 5 calls it the Average Directional Movement Index and places it in the Trend group, according to the MT5 indicator help.
- +DI (positive directional indicator): how much of the recent movement has been upward.
- -DI (negative directional indicator): how much of the recent movement has been downward.
- ADX: a smoothed measure of how far apart +DI and -DI are, which is what turns the two into a single strength reading.
The two DI lines carry the direction. When +DI is above -DI, upward movement has dominated the period; when -DI is above, downward movement has. ADX itself only tells you how decisive that dominance has been.
Reading the ADX Value
Read ADX by its level and by its slope. The level describes how strong recent directional movement has been, and the slope tells you whether that strength is growing or fading.
| Reading | What it describes | What it does not tell you |
|---|---|---|
| Below about 20, flat | Weak or no trend: price is moving sideways or chopping | Which way the next move goes, or when a trend will start |
| Rising through 20 to 25 | Directional movement is building | That the move will continue, or that it is a good time to enter |
| Above about 25 to 40 | A trend with clear persistence in one direction | Whether the trend is up or down: check +DI and -DI |
| Very high, then turning down | A strong trend that is losing momentum | That price will reverse: trends often pause or move sideways instead |
These thresholds are conventions that traders share, not rules built into the indicator. A reading of 24 is not meaningfully different from 26, and the levels that matter on one pair or timeframe may not match another. Use them as rough zones and look at the slope as much as the number.
The Default Period and What Changing It Does
The standard setting is 14 periods, which is also the default in MT5. On an H4 chart that covers a little over two trading days; on a daily chart, nearly three weeks.
A shorter period, such as 7, makes ADX react faster and produces more swings across the thresholds, including more readings that fade quickly. A longer period, such as 21 or 28, smooths the line and confirms trends later. There is no correct period in general. Pick one, keep it fixed while you judge whether the filter suits your method, and change it only for a reason you can state.
A Worked Example: The Same Setup With and Without the Filter
This example is illustrative. Suppose your method is to buy pullbacks in an uptrend on the EUR/USD H4 chart, using a moving average to define the trend. Price pulls back to the moving average, and the setup looks ready.
Without the filter: the moving average slopes up, price is above it, and the pullback has reached the level. You take the trade because every condition in your method is met.
With the filter: you add one condition, that ADX(14) must be above 20 and rising before you use a trend approach at all. On this chart ADX reads 16 and has been flat for two days, while +DI and -DI keep crossing each other. The moving average is sloping, but only gently, and the last two weeks have been a slow drift rather than a move. The filter says this market is not trending in any meaningful way, so the pullback setup is not one your method was built for, and you skip it.
The filter has not told you where price goes next. It has told you that the conditions your strategy assumes are not present. Whether that kind of filter suits your method is something to check in your own trading journal over many trades, not to assume.
Using ADX to Decide Whether to Trade a Trend Approach Right Now
The most practical use of ADX is a yes or no question before you look for entries: is this market trending enough for a trend method?
- ADX low and flat: trend methods tend to give conflicting signals here. Either stand aside or use a method designed for ranges.
- ADX rising from a low level: directional movement is building. Some traders start watching for trend setups, often around a breakout from a range.
- ADX high: a trend is established. Your trend method applies, and the DI lines tell you which side it is on.
The method itself, how to define the trend and where to enter, belongs in your strategy. Our trend trading guide covers that side.
The Two Common Mistakes
Treating a high reading as a buy
An ADX of 45 says a strong trend exists. It does not say the trend is up, and it does not say now is a good price. In a strong downtrend, ADX rises just as it does in an uptrend. Always read the DI lines before you read anything into the ADX value.
Using the DI crossover as a standalone entry
Wilder described +DI crossing above -DI as a buy signal and the reverse as a sell, and the MT5 help repeats this. In a sideways market the two lines cross back and forth constantly, which is exactly when ADX is low. A crossover taken without the ADX reading, or without a method around it, is one line crossing another and little more.
Where to Find ADX in MT4 and MT5 and How to Add It
In MT5, open the Navigator window, expand Indicators, then Trend, and drag Average Directional Movement Index onto the chart. You can also use Insert, Indicators, Trend from the top menu. In the settings window, set the period (14 by default) and the colours of the three lines. MT4 has the same indicator under Trend, and FXPrimus lists its built-in tools on the MT5 platform page.
ADX opens in its own window below the price chart. If you want to mark 20 or 25 as reference levels, add them on the Levels tab of the indicator settings.
The Limits of ADX
- It lags: ADX is smoothed twice, so it confirms a trend after it has started and shows weakening after the move has slowed.
- It reads strength, not quality: a sharp news spike can push ADX up as much as a steady trend, and the two are very different markets to trade.
- It changes by timeframe: the same pair can show a high ADX on H1 and a low one on the daily chart at the same moment.
- It changes by instrument: pairs and CFDs that trend for long stretches and those that mostly range produce different typical readings, so a threshold set on one may not suit another.
- It says nothing about volatility in price terms: for stop distances and position sizing, use a volatility measure such as the average true range.
ADX FAQ
What does the average directional index measure?
It measures the strength of a trend over a set number of bars, on a scale of 0 to 100. It does not show direction. For direction, compare the +DI and -DI lines that come with it.
What is a good ADX reading?
Many traders treat readings below about 20 as no trend and above about 25 as a trend. These are conventions, not rules, and the slope of the line matters as much as the level.
Does a high ADX mean I should buy?
No. A high ADX means a strong trend exists, up or down. It says nothing about direction or entry price. Check +DI and -DI for direction and use your strategy for the entry.
What period should I use for ADX?
The standard and MT5 default is 14. Shorter periods react faster and produce more short-lived swings; longer ones are smoother and slower. Choose one and keep it fixed while you evaluate it.
Is the DI crossover a trading signal?
Wilder described it as one, but in sideways markets the lines cross constantly. Most traders treat a crossover as information about which side has dominated recently, read together with ADX and a full method.
Can I practise reading ADX without risking money?
Yes. A demo account lets you add ADX to several pairs and timeframes and watch how the reading behaves in trends and ranges before you use it in a live strategy.
The Takeaway
ADX answers one question: is there a trend worth applying a trend method to? It does not tell you which way to trade or when to enter. Add it once you have a strategy, read the DI lines for direction, and treat the thresholds as rough zones. A PrimusDEMO account on MT4 or MT5 is a place to watch how the filter behaves on your pairs before it affects a live decision.
Open a PrimusDEMO account | Read the trend trading guide
Risk disclosure. This article is for informational and educational purposes only and is not financial advice, legal advice or tax advice. Trading forex and CFDs carries a high risk of loss and is not suitable for every investor. Past performance does not guarantee future results, and no indicator, including ADX, predicts future price movements or guarantees that a trend will continue. The chart readings in the worked example are illustrative and are not taken from any real account. Review the full terms and conditions, the Client Agreement and the Risk Disclosure before trading.