Average Directional Index (ADX)

What Is an Average Directional Index (ADX)?

The general interpretation of the values is as follows:

How to Calculate the Average Directional Index (ADX)

Please follow the following steps to calculate the value of Average Directional Index (ADX) indicator:

1. Calculate Directional Movement (+DM) using the formula:

+DM = Current High - Previous High

2. Calculate -DM using:

-DM = Previous Low - Current Low

3. Now choose between +DM and -DM by selecting the one with a higher value.

4. Calculate the True Range (TR) by using either of the following:

Current high - Current low; Current low - Previous close; Current high - Previous close

5. Calculate the smoothed 14-period averages of the TR, the +DM, and –DM by using:

First 14TR = Sum of first 14 TR readings

Next 14TR = first 14TR – (prior 14TR/14) + current TR

6. Now calculate the +DI and -DM values by using:

+DI = (Smoothed +DM / ATR) x 100 

-DI = (Smoothed -DM / ATR) x 100

7. Now you can calculate the directional movement index (DMI) by using the following equation:

DX = ( | +DI - -DI |  / | +DI + -DI | ) x 100  

8. To calculate ADX you have to determine the DX for all 14 periods, and to calculate the first ADX, you should divide the sum of all 14 periods of DX by 14. For the remaining 13, use the following formula:

ADX = (Previous ADX x 13) + Current ADX) / 14