ADX or call it Average Directional Index is a trend indicator that was developed by J. Welles Wilder. This indicator uses a three moving average lines that help us to analyse the security chart and make informed decisions relating to the security movement.

Key facts about Average Directional Index on IQ Option

• ADX indicator is a trend indicator that measures both the strength and direction of the trend in the financial market. this indicator quantifies the strength of the trend from the scale of zero to hundred.

• This indicator is made from the composition of three moving average lines i.e. +DI, – DI & ADX line. The intersection of the three lines helps us to identify the upcoming trends and reversals.

• In order to find buying and selling opportunities. You need to pay attention to the intersection of +DI and – DI lines. when the +DI line intersects above the -DI line it signals a bullish trend and vice versa when the +DI line intersects below the -DI line it signals a bearish trend.

• Talking about the ADX line, you can use the ADX line to confirm the strength of a trend. For Instance, when the ADX line is between 0 – 25 it signals an absence of trend and vice versa when the ADX line is between 75 -100 it signals an extreme trend.

How to find and add an ADX indicator on IQ Option?

ADX indicator is a free-to-use indicator and you can try this indicator even on IQ Option demo account. Firstly, Just login to your IQ Option chart and make sure to set the default chart to candlestick. secondly, click on the indicator button and search for Average Directional Index in the search bar. Lastly, click the name and adjust the settings as per requirements and your trading nature once you are done click apply.

Using ADX indicator to find signals on IQ Option

Trading with the ADX indicator is very easy. As, I said above you just need to focus on the intersection of +DI and -DI lines, when the +DI line intersects above the -DI line it signals a bullish trend and vice versa when the +DI line intersects below      -DI line it signals a bearish trend.

The use of ADX line

Once, you found the trend with +DI and -DI lines now, you can use the third line i.e. ADX line to confirm the strength of the trend. The ADX line oscillates between 0 – 100 which helps us confirm the trend. When the ADX line ranges between 0 -25 it signals an absence of a trend. Similarly, when the ADX line ranges between 25 – 50 it signals a strong trend. while 50- 75 signals a very strong and lastly, when the ADX is near 75 – 100 it signals an extreme trend and here you make your maximum of profits.

Combination of EMA and ADX indicator

ADX indicator is one of the most powerful indicators and can give you great signals. However, if you combine it with other trend indicators it will give you even more high-quality signals. For Instance, I am going to combine the ADX indicator with the EMA (Exponential Moving Average) indicator. Firstly, you need to add the ADX indicator and EMA indicator from the indicator list. next, set the duration of the indicator to 21. You can even reduce it if you are going to trade for a short duration.

Now, Once you have got a buy signal with the ADX indicator you need to confirm the trend with EMA. when the EMA line is above the price it signals a bullish trend and you can place a up trade here.

Conversely, Once you have got a sell signal with the ADX indicator you need to confirm the trend with EMA and when the EMA line is below the price it signals a strong bearish trend and you can place a down trade here.

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