Indicators

ADX

A 0–100 measure of how strongly a trend is moving, without saying which way. High ADX means a strong trend; low ADX means a range.

Also called: average directional index · ADX indicator · DMI

What it means

ADX quantifies trend strength only. It says nothing about direction — a crashing market and a surging one can both print a high ADX. Readings above 25 conventionally indicate a trend, below 20 a range.

Its value is as a filter on other tools. Mean-reversion logic behaves very differently above and below the trend threshold, and ADX is the standard way to tell those conditions apart.

Like RSI, ADX uses Wilder smoothing and is a lagging measurement: it confirms a trend has established rather than predicting one.

How OptionLab Pro’s engine uses it

In the live engine

ADX is a primary input to our regime classifier, which scores each bar and then applies hysteresis: a regime change needs 2 consecutive bars to commit, and 3 for the ranging state. Without hysteresis an ADX oscillating around 25 flips the regime every bar, and because regime drives the engine weighting, that flip propagates into the signal. The classifier also reads 5-bar ADX velocity and persistence, not just the level.

go/internal/engine/classify.go (ClassifyRegimeArrScored + hysteresis)

The common mistake

Where traders get this wrong

Reading a rising ADX as bullish. It measures strength, not direction, and a strong downtrend produces exactly the same rising ADX as a strong uptrend.

Go deeper

There is a full lesson on this in the Academy, with an interactive widget and a Hindi translation.

Open the lessonBrowse the glossary

Related terms

Market RegimeRSI (Relative Strength Index)Confluence

Educational and analytical content only. OptionLab Pro is not a SEBI-registered investment adviser or research analyst and does not give buy or sell recommendations. Derivatives trading carries a high risk of loss.