ADX Trading Strategy (Average Directional Movement Index Indicator) — Facts And Historical Backtests!

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 post, we look at how the Average Directional Movement performs alongside other indicators, and we test some ADX trading strategies.

We start with a crossover strategy based on the positive and negative directional indicators:

➨ If the DI+ crosses over the DI-, go long.

➨ If the DI+ crosses below DI-, exit the position.

The equity curve ends up as shown below on the S&P 500 (no commissions and slippage).

You can find more info about this trading strategy here:

https://www.quantifiedstrategies.com/adx-trading-strategy/