Wealth-Lab Wiki

API ChartStyles Community Components Community Indicators IndexDefinitions Knowledge Base Misc Optimizers PosSizers Providers Standard Indicators TASC Traders Tips TASCIndicators Tutorial Videos Visualizers
RSS

Navigation


Quick Search
»
Advanced Search »


Syntax

public static ADX Series(WealthLab.Bars bars, int period)

Parameter Description

Bars The Bars object
period Indicator period

Description

ADX stands for Average Directional movement Index and is used to measure the overall strength of the trend. The ADX indicator is an average of DX values. The ADX is a component of the Directional Movement System developed by Welles Wilder. This system attempts to measure the strength of price movement in positive and negative direction using the DIPlus and DIMinus indicators along with the ADX.

Interpretation

The ADX is an excellent indicator for showing trend strength. The larger its value the stronger the current trend. A value above 25 is considered to be a trending market.
  • When the ADX turns down from high values, then the trend maybe ending. It might be a good time to start closing open positions.
  • If the ADX is declining, then the market is becoming less directional, the current trend is weakening. You should not be trading a trend system.
  • When the ADX stays at a low value, the market is considered to be flat or dull. The longer the ADX stays at a low value the more likely a strong trending move will occur.
  • If after staying low for a lengthy time, the ADX rises by 4 or 5 units, (for example, from 15 to 20), it gives a strong signal to trade the current trend.
  • If the ADX is rising then the market is showing a strengthening trend. The value of the ADX is proportional to the slope of the trend. The slope of the ADX line is proportional to the acceleration of the price movement (changing trend slope). If the trend is a constant slope then the ADX value tends to flatten out.

Calculation

ADX is equivalent to the Wilder's moving average (see WilderMA) of the direction movement (DX) over the specified Period.

Example

using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;

namespace WealthLab.Strategies { public class MyStrategy : WealthScript { private StrategyParameter paramPeriod; public MyStrategy() { paramPeriod = CreateParameter("ADX Period", 10, 10, 30, 1); } // Thank you fundtimer public Color WS4ColorToNET( double WS4Color ) { return Color.FromArgb( (int)Math.Floor( ( WS4Color % 1000 ) / 100 * 28.4 ), (int)Math.Floor( ( WS4Color % 100 ) / 10 * 28.4 ), (int)Math.Floor( WS4Color % 10 * 28.4 ) ); } protected override void Execute() { // Use ADX to determine how much prices are trending, color bars accordingly int period = paramPeriod.ValueInt;

// ADX is one of "unstable" indicators, see Language Guide for information for(int bar = period*3; bar < Bars.Count; bar++) SetBarColor( bar, WS4ColorToNET( Math.Round( ADX.Series( Bars, period )[bar] / 5 )*100 ) ); } } }

Important Disclaimer: The information provided by Wealth-Lab is strictly for informational purposes and is not to be construed as advice or solicitation to buy or sell any security.  The owner of Wealth-Lab.com assumes no liability resulting from the use of the material contained herein for investment purposes. By using this web site, you agree to the terms of this disclaimer and our Terms of Use.

Used under license from FMR Corp. Copyright 2008 FMR Corp. All rights reserved.


ScrewTurn Wiki. Some of the icons created by FamFamFam.