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The Average Directional Index ( ADX ) is essentially an oscillator the determines if a market is trending. It is made up of two lines : the UP ( green ) line and the DOWN ( red ) line.
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As can be seen on the Chart left, the 'trigger' event is when the lines crossover. It is recommended that when planning to trade using this indicator that a trade should NOT be instigated on the crossover event, but that the price, be it high or low for the date, be noted, and a trade be instigated when this price is exceeded. The purpose of this rule is to eliminate being whipsawed when the market is listless and generating numerous false signals. |
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