ADX Rating Trading Strategy


The average directional movement index (A.D.X.) was developed in 1978 by J. Welles Wilder as a technical indicator of trend strength in a series of prices of a financial instrument. It is a combination of two other indicators developed by Wilder, the positive directional indicator (abbreviated +DI) and the negative directional indicator (-DI).

Plus DI represents an absolute up movement and Minus DI represents absolute down movement. Here please note that “+” and “-” denotes only upward and downward movement. “-DI” is not a negative number. But a positive number of downward movement. The A.D.X. combines them and smooths the result with a smoothed moving average.

ADX Rating is the average of ADX with a value period bars ago.

Indictor Type



ADXR = (adx + adx(-period)) / 2

How to Use

Bearish Scenario

A high value of ADXR indicates a bearish trend. Thus when the value is high meaning buyers are dominant thus a selling signal can be generated.

Bullish Scenario

A low value indicates a bullish scenario. Thus when the value is low meaning sellers are dominant thus a buying signal can be generated.

Building on Mudrex

A low value of ADX indicates a strong seller’s market meaning prices might go up and a buying signal can be generated and vice-versa.


  • Buy:- ADX crosses down 25
  • Sell:- ADX crosses up 85
  • Time Frame:- 5 minutes
  • Stop Loss:- 10%

Creating on Mudrex

Components:- To create this strategy we need 2 indicators. One to buy and one to sell.

For Buying:-

adx trading strategy

For Selling:- 

adx trading strategy

Final Strategy:-

adx trading strategy


Running on Binance Futures: BTC/USDT with tick interval of 5m yielded an overall profit of 2.98%

adx trading strategy backtest

Find out more on the Mudrex Blog.

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