Indicator, not scored

ADX: the Average Directional Index and trend strength

What the Average Directional Index measures, how +DI and -DI give a trend its direction, what readings of 20, 25, and 40 mean to traders, and ADX today.

What it is

The Average Directional Index, or ADX, measures how strong a trend is, whichever way it runs. J. Welles Wilder introduced it in 1978, alongside RSI. It runs from 0 to 100, and the standard setting looks back 14 sessions.

How it is calculated

Each session, the move up is how far the high rose above the prior high, and the move down is how far the low fell below the prior low. Only the larger of the two counts that day. Smoothed over 14 sessions and divided by the average true range, they become +DI and -DI. ADX is the smoothed average of the gap between +DI and -DI, divided by their sum.

How traders read it

Readings under 20 are generally taken to mean no clear trend, readings over 25 a trend worth the name, and readings over 40 a strong one. ADX says nothing about direction: that comes from whether +DI is above -DI.

Because it is an average of an average, ADX is slow. It can fall while a stock holds steady at a new high, only because the price stopped moving much.

ADX on Breakaway

Every public stock page shows ADX 14 and whether +DI is above -DI. Breakaway's regime label, trending, transition, or choppy, starts from ADX and the moving averages, then corrects for the case ADX reads wrong. ADX itself does not count toward the Quality Score.

ADX on Alphabet

Prices 18 minutes old, as of 1:42 PM ET. Members see real-⁠time prices.

Alphabet (GOOGL) has an ADX 14 of 14.0, under 20, with +DI above -DI: over the last 14 sessions its larger daily moves have been up.

GOOGL on the chart

Not scored

Shown for reference. None of these counts toward the Quality Score: in our tests on 20 years of daily prices, none of them improved it.

  • ADX 1414.0

    Under 25, with +DI above -DI.

GOOGL's Quality Score and the rest of its page

ADX of 40 or more

19 of the 300 largest companies with a page on Breakaway ($56B and up) have an ADX 14 of 40 or more. The largest of the 19, by market cap:

  • BACBank of America40.3

    ADX 14, with +DI below -DI.

  • RTXRTX43.6

    ADX 14, with +DI below -DI.

  • TMOThermo Fisher Scientific44.4

    ADX 14, with +DI above -DI.

Breakaway shows ADX on every stock page and leaves it out of the Quality Score. How the Quality Score works

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