DEFINITION of 'Wilder's DMI (ADX)'
BREAKING DOWN 'Wilder's DMI (ADX)'
The indicator was developed by J. Welles Wilder, and shows the strength of a trend- either up or down. According to Wilder, a trend is present when the ADX is above 25.
If DI+ is above DI-, an ADX reading of 25 or higher indicates a strong uptrend. If DI- is above DI+, an ADX reading of 25 or higher indicates a strong downtrend. The ADX may stay above 25 even when the trend reverses. Since ADX is non-directional, this shows the reversal is as strong as the prior trend.
Many traders use 20 to indicate a trend, instead of 25.