DEFINITION of 'Wilder's DMI (ADX)'

Three lines compose the Directional Movement Indicators (DMI): ADX, DI+ and DI-. The Average Directional Index (ADX) line shows the strength of the trend. The higher the ADX value, the stronger the trend. The Plus Direction Indicator (DI+) and Minus Direction Indicator (DI-) show the current price direction. When the DI+ is above DI-, current price momentum is up. When the DI- is above DI+, current price momentum is down.


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.

  1. Negative Directional Indicator ...

    A component of the average directional index (ADX) that is used ...
  2. Directional Movement Index - DMI

    The Directional Movement Index, or DMI, is an indicator that ...
  3. Trend Trading

    A trading strategy that attempts to capture gains through the ...
  4. Momentum Investing

    An investment strategy that aims to capitalize on the continuance ...
  5. Giuseppe Morchio

    An Italian executive who became CEO of Italian automaker Fiat ...
  6. Trending Market

    A market that is trending in one direction or another. A bull ...
Related Articles
  1. Trading

    Finding Market Movement With The ADX

    Take a closer look at this indicator, which refines your insight into the strength of a prevailing trend.
  2. Trading

    Use The Momentum Strategy To Your Advantage

    Learn how to use a number of different indicators to know when to make your trading moves.
  3. Tech

    The Most Important Technical Indicators For Binary Options

    Trading binary options is not for the novice, but if you're ready to delve in, get to know the best technical indicators.
  4. Trading

    Trading Without Noise

    False signals can drown out underlying trends. Find out how to tone them down and tune them out.
  5. Trading

    The Bulls Are Back on Apple Stock

    Technical signs point to a rally for Apple stock going into its next earnings report.
  6. Trading

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  7. Trading

    Netflix Stock Is at a Crucial Pivot Point

    Technical signs point to continued weakness for Netflix stock, but a move above a key level could push it higher.
  8. Trading

    Top 7 Technical Analysis Tools

    Technical indicators determine the direction of an asset’s momentum and whether that direction will continue. Here are seven used most.
  9. Trading

    Nvidia Stock Is Vulnerable to a Downside Breakdown

    After an incredible run to start the year, shares of Nvidia are cooling off.
  1. What are the main signals traders use when following the Average Directional Index ...

    Learn how the average directional index, or ADX, measures momentum and strength in market trends and how specific signals ... Read Answer >>
  2. How is the Average Directional Index (ADX) calculated and what is the formula?

    Learn about average directional index, or ADX, indicators, including the calculations for various elements of the ADX technical ... Read Answer >>
  3. What is the Directional Movement Index (DMI) formula and how is it calculated?

    Discover the formulas used to calculate the three parts of the directional movement index: +DI, -DI and the average directional ... Read Answer >>
  4. Does a strong trend (ADX > = 40) cause an increase in volatility?

    In technical analysis, there have been numerous indicators invented for identifying trends. One of the most common of these ... Read Answer >>
  5. What are the best technical indicators to complement the Parabolic Indicator?

    Learn about two of the best technical indicators recommended for traders to use to refine a trading strategy based on the ... Read Answer >>
  6. What are the best technical indicators to complement the Triple Exponential Moving ...

    Learn about some of the best technical indicators that can be used to complement trading with the triple exponential moving ... Read Answer >>
Hot Definitions
  1. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  2. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  3. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  4. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  5. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  6. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
Trading Center