What is adx and how to use it in trading ?

The **Average Directional Index (ADX)** is a technical analysis indicator used to measure the strength of a trend in the market, regardless of whether it is an uptrend or a downtrend. It was developed by J. Welles Wilder, who also created other indicators like the Relative Strength Index (RSI). The ADX is part of a system that includes the **+DI (Positive Directional Indicator)** and **-DI (Negative Directional Indicator)**.

### Components of ADX:
1. **ADX Line (main line):** This line measures the strength of the trend, not its direction. ADX values range from 0 to 100:
- **0-25**: Weak trend (trend is not strong or volatile).
- **25-50**: Moderate trend (trend is strong enough to be useful).
- **50-75**: Strong trend (market is trending powerfully).
- **75-100**: Very strong trend (a very strong trending market).

2. **+DI (Positive Directional Indicator):** This measures the strength of the upward price movement.

3. **-DI (Negative Directional Indicator):** This measures the strength of the downward price movement.

### How to Use ADX in Trading:
1. **Trend Strength:**
- **ADX above 25** suggests a strong trend (whether up or down), so traders might look for opportunities to trade with the prevailing trend.
- **ADX below 25** suggests a weak or no trend, meaning the market is choppy and might not be ideal for trend-following strategies.

2. **Trend Direction (using +DI and -DI):**
- When **+DI is above -DI**, it signals a potential **uptrend**, and traders may look to go long (buy).
- When **-DI is above +DI**, it signals a potential **downtrend**, and traders may look to go short (sell).

3. **ADX Crossovers:**
- A common strategy involves watching for crossovers of the **+DI and -DI** lines:
- **+DI crossing above -DI** can signal a buy signal (uptrend).
- **-DI crossing above +DI** can signal a sell signal (downtrend).

4. **ADX Increasing or Decreasing:**
- **Rising ADX** suggests increasing trend strength. This could be a confirmation of a continuing trend.
- **Falling ADX** suggests weakening trend strength. Traders may expect a reversal or consolidation.

### Example Strategy:
- **Strong Trend Strategy:**
1. Look for an ADX reading above 25 (suggesting a strong trend).
2. Check if **+DI is above -DI** (bullish uptrend) or **-DI is above +DI** (bearish downtrend).
3. Trade in the direction of the trend.

- **Trend Reversal Strategy:**
1. ADX reading below 25 (weak trend) suggests potential for range-bound or sideways movement.
2. Wait for the **+DI and -DI lines to cross** and signal a new trend direction.

### Limitations:
- **Late signal**: The ADX does not predict trend reversals or market tops and bottoms. It only identifies the strength of a trend.
- **Lagging indicator**: Since ADX is based on past price action, it tends to lag in signaling the beginning or end of a trend.

### Summary:
- Use **ADX above 25** to confirm strong trends.
- Use **+DI** and **-DI** to identify the direction of the trend.
- Look for crossovers of **+DI and -DI** to signal potential entries or exits.

Do you currently trade with any indicators or systems like ADX?