ADX Trading Strategy - Statistics, 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 article, we look at how the Average Directional Movement performs alongside other indicators, and we test some ADX trading strategies.

We backtest the following trading rules:

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

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

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

We showed how to calculate the ADX and the best settings for the ADX indicator here >>

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