ADX or Average Directional Index is a trend indicator that was developed to detect the long-term signals of security however, now you can use this indicator with any security or time frame. Hindustan article I will are you can use this indicator on the Binomo trading platform properly. But let’s first check out What is an ADX indicator.
What is an ADX indicator?
ADX indicator is a trend indicator that was developed J. Welles Wilder in 1978. The main motive of this indicator was to find the upcoming long-period signals but now you can easily this indicator on any security and time frame just by adjusting the periods of the indicator. The longer you set the period of the indicator the more long-oriented your ADX indicator will become. conversely, the shorter the period you set the more sensitive your indicator will become.
Unfolding ADX Indicator on Binomo
You can easily find and set the ADX indicator on the Binomo trading platform. Firstly, you need to sign up on the Binomo trading platform next click on the indicator once you signed up. lastly, search for the ADX indicator in the list and click the name.
Thats it!! The indicator will be added to your chart. once you open the configuration box you notice the important components of the ADX indicator like the +DI line, -DI line, ADX line, & Histogram line.
+DI line: The +DI line indicates the increase in the asset price.
-DI line: The +DI line indicates the decrease in the asset price.
ADX line: The ADX line represents the strength of the trend and is calculated by taking the difference between the +DI and -DI lines
Histogram line: Histogram line is optional you won’t find the histogram line in the default settings of the indicator. The histogram line help us to verify our calls.
How to trade with ADX indicator on Binomo
Finding high-quality signals using the ADX indicator on Binomo is easy. When the +DI and – DI lines intersect each other it helps us to identify the upcoming trends. and later you can use the ADX line to verify the strength of that trend.
The ADX indicator oscillates on a scale of 0 to 100, with a higher value indicating a strong Trend and a lower value indicating a weak trend.
When the +DI line intersects above the – DI line plus the histogram line shows two or three green spikes it signals an upcoming bullish trend and here we can place a buy trade.
Vice versa, When the +DI line intersects below the – DI line plus the histogram line shows two or three red spikes it signals an upcoming bearish trend and here we can place a sell trade.
Using ADX readings
Once you have found a bullish or bearish signal using the +DI and -DI line you can now find the strength of the trend using the ADX line. Remember the following ranges :
0 -25: The ADX reading below 25 indicates a weak trend or confusion between buyers and sellers. It may not be an ideal time for traders to place trades.
25 -50: A reading below 50 indicates an upcoming bullish or bearish trend. Here, you can place long-term trades and accelerate your trading positions as the price follow the trend.
50 – 75: A reading below 75 signals a strong trend and here, you place both short and long-term trades.
75 – 100: A reading near 100 represents the best stage of the trend. Here, you can place multiple long-term trades and you make most of the profit here.
Using ADX Divergence and Comvergence
The indicator divergence occurs when the price and the indicator line are moving in an opposite direction due to market volatility or could possibly signal an upcoming bullish or bearish reversal Simialrly, Convergence is just the opposite of DIvergence. The convergence occurs when the price and the indicator line is moving in an equivalent direction and you can these concepts two find the best entry exits points