ADX in trading

The average directional index (ADX) is a technical indicator used by traders to determine the strength of a financial security's price trend. It helps them reduce risk and increase profit potential by trading in the direction of a strong trend.

Key takeaways. Average directional index (ADX) is a short-term chart indicator. It can be used to help you evaluate the market or an investment's strength. ADX currently suggests the short-term momentum behind stocks may be strong, with a caveat.