Average Directional Movement Index Rating (ADX Rating)
The Trend Strength Gauge That Speaks Plain English
The classic Average Directional Index (ADX) is brilliant at measuring how strongly the market is trending, but its raw 0-100 numbers can feel a bit... cryptic. Enter ADX Rating (sometimes called ADXR) – a smarter twist that averages the current ADX with its value from n periods ago and then translates the result into clear, color-coded strength levels. It's like putting training wheels on the ADX: same reliable engine, but way more intuitive for quick decisions. Perfect for traders who want to know at a glance if the trend is worth riding or if it's just lazy sideways drifting.
How ADX Rating Is Calculated
It's elegantly simple:
- First calculate the standard ADX (usually with 14-period setting).
- Then: ADX Rating = (Current ADX + ADX from n periods ago) / 2
- n is typically 14 – same as the ADX lookback.
This gentle averaging smooths out short spikes and gives a slightly laggier but more stable reading – think of it as the 'confirmed' version of trend strength.
Many platforms label it ADXR (Average Directional Movement Index Rating) – same thing!
The Magic Categories – What the Numbers Really Mean
Instead of staring at raw numbers, ADX Rating hands you plain-language buckets:
- 0–19: Weak or No Trend – Sideways city. Stay out or play range-bound games.
- 20–29: Weak Trend – Something's moving, but it's wobbly. Caution flag up.
- 30–39: Moderate Trend – Decent momentum building. Starting to get interesting for trend plays.
- 40–49: Strong Trend – Now we're talking! Reliable direction worth trading.
- 50–59: Very Strong Trend – Trend on steroids. Ride it, but watch for exhaustion.
- 60–100: Extremely Strong Trend – Parabolic move territory. Great while it lasts, but reversals lurk.
These bands make snap decisions way easier than squinting at plain ADX.
How to Actually Use It in Trading
Practical ways to put ADX Rating to work:
- Trend filter: Only take trend-following trades when Rating ≥ 30–40 (moderate to strong). Below 20? Sit on your hands.
- Entry timing: Wait for Rating to climb into 'Strong' territory before jumping in – confirms the move has legs.
- Exit warning: When Rating hits 50+ and starts rolling over, consider locking profits – extreme strength often precedes reversals.
- System enhancer: Pair with +DI/-DI crosses – direction from DMI, strength confirmation from ADX Rating.
Always combine with directional tools – ADX Rating tells you *how strong*, not *which way*.
Strengths and the Inevitable Caveats
The Good Stuff
- Super intuitive categories – perfect for beginners or fast scanning.
- Slight smoothing reduces false whips from temporary spikes.
- Excellent filter for avoiding crappy, low-momentum markets.
The Reality Check
- Still a lagging indicator – it confirms trends after they've started.
- No directional info on its own – must team up with +DI/-DI or price action.
- Extreme readings (60+) can persist longer than you'd expect – don't fight monster trends too early.
Your ADX Rating Quick-Start Checklist
- Plot standard DMI/ADX with Rating (often labeled ADXR).
- Focus on levels 30+ for trend trades, below 20 for range caution.
- Combine with +DI/-DI for direction and cross confirmation.
- Backtest your rules – see how Rating filters improved win rate.
- Watch for Rating peaks in very strong trends – potential exhaustion signal.
Key Takeaways
ADX Rating smooths and categorizes classic ADX into clear, trader-friendly strength levels.
Makes it dead simple to spot when a trend is worth trading (30+) vs when to stay away (<20).
Great as a filter to keep you out of choppy, low-momentum messes.
Remember: strength only, no direction – always pair with DMI or price tools.
Use it to trade smarter, not harder – let strong trends come to you and skip the noise. Stay patient and trade happy!
Average Directional Movement Index Rating (ADX Rating)
The Trend Strength Gauge That Speaks Plain English
The classic Average Directional Index (ADX) is brilliant at measuring how strongly the market is trending, but its raw 0-100 numbers can feel a bit... cryptic. Enter ADX Rating (sometimes called ADXR) – a smarter twist that averages the current ADX with its value from n periods ago and then translates the result into clear, color-coded strength levels. It's like putting training wheels on the ADX: same reliable engine, but way more intuitive for quick decisions. Perfect for traders who want to know at a glance if the trend is worth riding or if it's just lazy sideways drifting.
Table of Contents
How ADX Rating Is Calculated
It's elegantly simple:
- First calculate the standard ADX (usually with 14-period setting).
- Then: ADX Rating = (Current ADX + ADX from n periods ago) / 2
- n is typically 14 – same as the ADX lookback.
This gentle averaging smooths out short spikes and gives a slightly laggier but more stable reading – think of it as the 'confirmed' version of trend strength.
Many platforms label it ADXR (Average Directional Movement Index Rating) – same thing!
The Magic Categories – What the Numbers Really Mean
Instead of staring at raw numbers, ADX Rating hands you plain-language buckets:
- 0–19: Weak or No Trend – Sideways city. Stay out or play range-bound games.
- 20–29: Weak Trend – Something's moving, but it's wobbly. Caution flag up.
- 30–39: Moderate Trend – Decent momentum building. Starting to get interesting for trend plays.
- 40–49: Strong Trend – Now we're talking! Reliable direction worth trading.
- 50–59: Very Strong Trend – Trend on steroids. Ride it, but watch for exhaustion.
- 60–100: Extremely Strong Trend – Parabolic move territory. Great while it lasts, but reversals lurk.
These bands make snap decisions way easier than squinting at plain ADX.
How to Actually Use It in Trading
Practical ways to put ADX Rating to work:
- Trend filter: Only take trend-following trades when Rating ≥ 30–40 (moderate to strong). Below 20? Sit on your hands.
- Entry timing: Wait for Rating to climb into 'Strong' territory before jumping in – confirms the move has legs.
- Exit warning: When Rating hits 50+ and starts rolling over, consider locking profits – extreme strength often precedes reversals.
- System enhancer: Pair with +DI/-DI crosses – direction from DMI, strength confirmation from ADX Rating.
Always combine with directional tools – ADX Rating tells you *how strong*, not *which way*.
Strengths and the Inevitable Caveats
The Good Stuff
- Super intuitive categories – perfect for beginners or fast scanning.
- Slight smoothing reduces false whips from temporary spikes.
- Excellent filter for avoiding crappy, low-momentum markets.
The Reality Check
- Still a lagging indicator – it confirms trends after they've started.
- No directional info on its own – must team up with +DI/-DI or price action.
- Extreme readings (60+) can persist longer than you'd expect – don't fight monster trends too early.
Your ADX Rating Quick-Start Checklist
- Plot standard DMI/ADX with Rating (often labeled ADXR).
- Focus on levels 30+ for trend trades, below 20 for range caution.
- Combine with +DI/-DI for direction and cross confirmation.
- Backtest your rules – see how Rating filters improved win rate.
- Watch for Rating peaks in very strong trends – potential exhaustion signal.
Key Takeaways
ADX Rating smooths and categorizes classic ADX into clear, trader-friendly strength levels.
Makes it dead simple to spot when a trend is worth trading (30+) vs when to stay away (<20).
Great as a filter to keep you out of choppy, low-momentum messes.
Remember: strength only, no direction – always pair with DMI or price tools.
Use it to trade smarter, not harder – let strong trends come to you and skip the noise. Stay patient and trade happy!
Related Terms
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