ADX Best Trend Indicator

Participating into a quiet market trend is very difficult things. Many Forex traders have trading systems for trend trading entry but when a market trend has trade it is course and is fading then it is of no use to you. Using ADX trend indicator with a trend trading system can assist you trade breakouts and reverses with bigger chance. The Average Directional movement index is traded to calculate market trend strength. The use is very easy. The Average Directional Movement index filter can have beneficial impacts on your trading results. The ADX trend indicator calculates only strength but not trend bias. This lets the Forex trader to pick the strongest trends to trade.

The currency chart above shows a bullish trend with multiple trades as the Average Directional Movement index trend indicator on the bottom presents a main of reading above the strong trend. The red line as a reference level of when the tool presents a strong market trend. To determine the trend strength, we suggest searching for trend entry only if the Average Directional Movement Index is above level 25.

Average Directional Movement Index trading rule
When moving trends, the Average Directional Movement Index Moves above when market is in strong market. When the market trend is fade , Average directional movement index moves bearish.

Average directional movement index isn't a directional technical indicator, just a strength indicator.

If you are searching for trend bias, I suggest using indicator to search reversals in the trend direction of the market trend or breakouts trading with the Average directional movement index. this will give bigger chance set ups with a strengthening trend.

Trading in strong market trends
- We can set up the risk but not the market.
- Just trading the bigger chance set ups that match your trading system
- Trading with Average Directional movement index lets you to identify a last potential trade to see if the entry is worth the risk.
- ADX id the indicator we will use to identify whether a bearish move is worth trading on a short trade. Average directional movement index also be traded in the same situation to grasp if an move is worth trading on a long trade. Either system the Average directional movement index will break through 25 level to show us that a strong trend is in market.

Chart example above shows us the strong bearish move
Here are the indicators at set on the graph above :
- Average directional movement index for determining market strength
- Fibonacci retracement for identify support in a bearish trend
- Stochastic indicator for determining overbought or oversold reversal.

We will analyze on the ADX indicator to trade through 25 level. If the ADX indicator breakout through 25, we have the indicator's signal to trade in the direction of the market trend. The instrument above trend on the D1 graph is bearish. Because the ADX indicator is not move yet. Fibonacci is a favorite tool to determine right levels to determine reversal move. Support level in a bearish trend is potentially at one of these price levels and if the instrument bounces off these points we can search to enter off that resistance level in a bearish trend.

A popular level is the 50% level. If the instrument can not keep 50% of its trade, then it may break down and reverse the overall trend. We can see above that the Forex market kept the 50% and is searching to trade bearish. When the average directional movement index or ADX indicator trades through we have another confirmation.

The stochastic trading indicator calculates a instrument closing price to its range over a given period. The 20 level gives an oversold area and the 80 level presents an overbought situation. We can set up the Stochastic's time period to eliminate the false signals to market movements. During a bearish trend to close near their lows. Slow stochastic indicator signal show in a bearish trend if the stochastick indicator reverses bearish below 80 level after a temporary bullish swing in the currency market. This gives bigger chance entries.

The ADX indicator calculates trend strength, and lets you to combine the other technical indicators to make sure you are only trading the strong trends. This trading system can hold you out of risky markets if your analyze is allowing your target run on a trend.