ADX Trend-Strength Filtered DI EntryWilder DMI system
ADX measures the strength of a trend, not its direction. Direction comes from the crossover of +DI and −DI.
Trade only when ADX is above a threshold of 25, and rising, and the DI cross confirms the direction. All three conditions are mandatory.
- Category
- Trend Following · Indicator-based
- Timeframe
- H4 · D1
- Suitable pairs
- USDJPY · AUDUSD · USDCAD · GBPUSD · XAUUSD
- Session
- Signal at the bar close · execute in London or New York
- Indicators / tools
- ADX(14) · +DI(14) · −DI(14) · ATR(14) · optional EMA(50)
Valid setup
Exact rules
Entry
- ADX(14) above 25 and rising — its value now above its value three bars ago.
- Sell when −DI crosses above +DI. Buy on the reverse.
- Optional confirmation: the close on the correct side of the EMA(50).
- Enter at the next bar's open.
- Skip it if ADX is above 45 — that is a late-stage trend and the reversal risk is high.
- Robustness add-on worth testing: require ADX above 25 for three consecutive bars, and above where it was five bars ago. This addresses the flicker problem.
Stop loss
- Entry ± 2 × ATR(14).
- Alternative: 0.5 × ATR beyond the recent swing high or low.
- Risk 0.5%–1%.
Take profit / exit
- Primary: a trailing ATR stop.
- Signal exit: ADX falling five or more points from its peak, or the opposite DI cross.
- An optional partial at 2.5R. ADX entries are late, so keep your expectations for R realistic.
Build ADX Trend-Strength Filtered DI Entry
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Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.
