# Average Directional Index (ADX)

> ADX (Average Directional Index) is a trend strength indicator that helps distinguish a trending market from a flat one and filter signals.

**ADX (Average Directional Index)** is a technical analysis indicator that **measures the strength of a trend** without specifying its direction.
It helps determine whether the market is trending or not.

## How ADX Works

The ADX is calculated based on two additional lines:

- **+DI (Positive Directional Index)** — the strength of the upward movement
- **-DI (Negative Directional Index)** — the strength of the downward movement

Calculations are based on historical price data, taking into account:

- The difference between the current high and low
- The difference between the previous close and the current high
- The difference between the previous close and the current low

Then a smoothed ADX line is constructed based on this data, showing the intensity of price movement.

## Interpreting ADX Values

The ADX value is always in the range **0-100**:

- **0–20** — no trend (sideways movement, flat)
- **20–25** — trend is starting to form
- **25–50** — strong trend
- **50–75** — very strong trend
- **75–100** — extremely strong trend (increased probability of correction)

> 💡 **Important:** The ADX doesn't show trend direction. To understand the price's direction, analyze the relative positions of the +DI and -DI lines:
- +DI above -DI → uptrend
- -DI above +DI → downtrend

## How to use ADX in trading

1. **Trade filtering**
		- Open a deal only when ADX > 25 to follow a trend
		- Ignore indicator signals during flat periods (ADX < 20)
2. **Breakout confirmation**
		- If ADX rises after a support/resistance breakout, the breakout is confirmed
3. **Close the deal**
		- A falling ADX indicates a weakening trend – you can partially lock in your profits

## ADX in Veles Bots (Standard Indicator)

In the Veles platform, ADX can be used as a filter for opening or closing a trade.

- If a specific value is not specified in the settings, the default condition is **ADX > 25** on the selected timeframe.
- To change the threshold and timeframe, click the **"Pencil"** icon and set your parameters.

📌 **Recommendation:** For more reliable signals, use ADX on higher timeframes (1 hour and above) in combination with trend indicators, such as:

- [Moving Averages](https://help.veles.finance/en/filters/sma/)
- [Donchian Channel](https://help.veles.finance/en/filters/dc/)
- [Keltner Channel](https://help.veles.finance/en/filters/kc/)

## ADX in Veles Bots (Flexible Indicator)

Custom indicator parameters:

- Period - the number of candles for calculation. Range: 3–50, default 14.
- Interval - the candle timeframe.
- Smoothing - period for calculating the Average True Range (ATR). Range: 3–50, default 14.
- Method - the calculation type. By bar close (only for the selected interval) or by minute (once per minute for any interval).
- Shift - shifts the requested indicator value back by the specified number of candles.

## Limitations

- ADX is a **lagging indicator**, so it doesn't react instantly to sharp price movements.
- It may lag during sharp market reversals.
- It's best used to confirm signals, not as the single decision-making tool.

## Summary

- ADX rises → trend strengthens
- ADX falls → trend weakens
- +DI above -DI → upward trend
- -DI above +DI → downward trend