Technical Indicators for MetaTrader 5
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MetaTrader 5
Top Rated Products MT5
Overview
Designed by Welles Wilder for daily commodity charts, the ADXW is now used in various markets by technical traders to assess the strength of a trend or even a trend for short- or long-term trades.
The ADXW uses a positive (DI+) and negative (DI-) directional indicator in addition to its trend line (ADX).
According to Wilder, a trend has strength when the ADX signal is above 25; the trend is weak (or the price has no trend) when the ADX is below 20. The absence of a trend does not mean that the price is not moving. It may not be, but the price may also be making a trend change or too volatile for a clear direction.
This indicator is considered an "enhanced" ADXW because users have it at their disposal:
- Indicator Lines: Set colors, Width, Styles, and smoothing mode (for the ADX line).
- Strong-Level: This is a level used by ADXW to indicate a strong trend when ADX crosses it, but it can also be used to define a "strong entry" even if the trend is not yet defined. We've used the standard "25" in this case, but it can be customized to your asset and timeframe.
- CROSS and STRONG signals: offers two types of signals based on the ADX and ADXW patterns, one given on the crossing of the DI+/DI- lines (Cross-Signal) and the other based on the DI value being above the "Strong-Level" level detailed above. Both utilize different arrows to indicate the signal the user receives.
- Noise Filter: Additionally, investors have access to a parameter that filters signals based on the amplitude of the DI+ and DI- lines, allowing for a drastic reduction of noise (false positive signals) in accordance with the usual behavior of the asset.
- More Consistent Signals: A common issue with traditional ADX or ADXW is reliance on current candle occurrences, which significantly increases the risk of false positives or sudden trend reversals. The ADXW-E aims to mitigate these occurrences by emitting signals only on closed candles and allowing for the parameterization of the ADX Level and Noise Filter for greater accuracy.
