Best ADX Trading Strategy

ADX Trading Strategy (Average Directional Movement Index Indicator) – Statistics, Facts And Historical Backtests!

Is it possible to use the ADX indicator (Average Directional Movement Index) (DMI) to find a profitable ADX trading strategy? This article looks at the ADX indicator where we make some historical backtest to evaluate and analyze. The adx indicator was developed by Welles Wilder and released in his book in 1978 called New Concepts In Technical Trading Systems. Mr. Wilder was productive, and in the same book, he published perhaps the most used indicator of them all, the relative strength index (RSI), in addition to the average true range (ATR), and parabolic SAR. The book was written before the personal computer came about, but all the indicators are widely used to this very day.

There are many ways to use the ADX in trading strategies. Our research and backtests indicate the ADX indicator is somewhat useful on its own but adds great value used alongside other indicators when you build trading strategies. In this article, we look at how the Average Directional Movement performs alongside other indicators, and we test some ADX trading strategies.

If you find this article useful, you might want to have a look at our landing pages for a lot of other trading strategies and edges:

What is the ADX indicator?

Mr. Wilder aimed to make a formula that measures the trend and the strength of the trend. He came up with the ADX indicator, an abbreviation for