If you have ever wondered, “What the best setting for an ADX Indicator is?” You are not alone. 

Many forex traders struggle to find the perfect setting that helps them spot trends and make profitable trades. 

The answer is not as simple as just picking a random number. You need to understand how the ADX (Average Directional Index) works, what settings work best for different trading styles, and how to use it correctly. 

What is the ADX Indicator?

The ADX (Average Directional Index) is a technical indicator that helps traders measure the strength of a trend. 

It does not tell you whether the market is going up or down, but it shows how strong the trend is. 

When the ADX is rising, it means the trend is getting stronger. When it is falling, the trend is weakening. 

Many traders use the ADX to confirm if a trend is worth trading or if they should stay out of the market.

The ADX has three main components:

• ADX Line: This measures trend strength. A high ADX value means a strong trend, while a low ADX value means a weak or sideways market.
• +DI (Positive Directional Indicator): This shows the strength of upward movements.
• -DI (Negative Directional Indicator): This shows the strength of downward movements.

Best Settings for the ADX Indicator

The default setting for the ADX is 14 periods, but this may not always be the best setting for your trading strategy. 

Different ADX settings and when to use them.

1. ADX 14 – The Default Setting (Best for Swing Trading)

The 14-period setting is the most commonly used because it provides a good balance between accuracy and speed. 

It smooths out price movements while still giving reliable trend signals.

When to Use

• Best for swing traders who hold trades for several days.
• Works well on the 1-hour, 4-hour, and daily timeframes.
• Ideal for catching strong trends in forex trading.

If the ADX is above 25, it means the trend is strong. If the +DI is above the -DI, it signals a buy trade. If the -DI is above the +DI, it signals a sell trade.

2. ADX 7 – Faster Signals (Best for Scalping and Day Trading)

If you are a scalper or day trader, you need faster signals. A 7-period ADX setting will give you quicker trend confirmation.

When to Use

• Best for short-term traders who trade on the 5-minute or 15-minute chart.
• Works well for scalping and day trading strategies.
• Helps traders enter and exit trades quickly.

You are trading GBP/USD on the 5-minute chart. The ADX 7 shoots above 30, and the +DI crosses above the -DI. This signals a strong uptrend, so you enter a quick buy trade.

3. ADX 20 or 25 – Slower but More Reliable Signals

If you prefer a more reliable trend confirmation and are okay with slower signals, the ADX 20 or 25 setting works well.

When to Use

• Best for position traders who hold trades for weeks.
• Works well on daily and weekly timeframes.
• Reduces false signals and focuses only on strong trends.

You are trading EUR/USD on the daily chart. The ADX 25 moves above 30, confirming a strong trend. You wait for a pullback before entering a trade.

How to Use ADX in a Trading Strategy

The Average Directional Index (ADX) is a tool that helps traders know whether the market is trending or just moving sideways without a clear direction. 

It also shows how strong a trend is. This is how you can use it in your trading strategy:

1. Check if  there’s a Strong Trend Before Entering a Trade

Before you buy or sell, you need to check if the market is moving in a clear direction.

• If ADX is above 25, it means the market has a strong trend.
• If +DI (Positive Directional Indicator) is above -DI (Negative Directional Indicator), it means buyers are stronger, and the price is likely to go up. This is a signal to look for buying opportunities.
• If -DI is above +DI, it means sellers are stronger, and the price is likely going down. This is a signal to look for selling opportunities.

If ADX is 30 and +DI is above -DI, it means the market is trending up strongly, so you might consider buying.

2. Avoid Markets Without a Clear Trend

If ADX is below 20, it means the market is moving sideways with no clear trend. This is a weak market condition, and trading here can be risky.

What to do? 

You can wait for a stronger trend to form or use a different strategy that works well in sideways markets (like range trading).

If ADX is 15, the market is not trending strongly, so it’s better to wait instead of entering a trade.

3. Use ADX with Other Indicators for Better Results

ADX works best when combined with other indicators to confirm trading signals. 

If ADX is above 25, RSI is below 30 (oversold), and MACD is turning up, it might be a strong buying opportunity.

Some useful indicators include:

• Moving Averages: These help confirm the direction of the trend. If the price is above the moving average, it supports a buying signal. If it’s below, it supports a selling signal.
• RSI (Relative Strength Index): This helps traders know if the market is overbought (too high and may drop soon) or oversold (too low and may rise soon).
• MACD (Moving Average Convergence Divergence): This confirms momentum (how strong the price movement is). If MACD also shows strength in the same direction as ADX, it makes the signal stronger.

Pros of Using the ADX Indicator

• Helps traders identify strong trends.
• Works in all timeframes.
• Can be combined with other indicators like RSI and Moving Averages.
• Reduces the chances of trading in a weak market.

Cons of Using the ADX Indicator

• Does not show trend direction.
• Can give late signals if set too high.
• Needs confirmation with other indicators.

Frequently Asked Questions 

1. What is the best ADX setting for beginners?

The 14-period ADX is best for beginners because it provides a balance between speed and accuracy.

2. Can I use ADX alone for trading?

No, it is best to use ADX with other indicators like Moving Averages or RSI for better accuracy.

3. What is the best ADX setting for scalping?

The ADX 7 setting works best for scalping because it gives faster signals.

4. What ADX value indicates a strong trend?

An ADX value above 25 usually indicates a strong trend, while below 20 suggests a weak trend.

Conclusion

Finding the best setting for the ADX Indicator depends on your trading style. If you are a swing trader, the default 14-period setting works best. 

If you are a scalper, a 7-period ADX will help you get faster entries. If you want more reliability, a 20 or 25-period setting will filter out weak trends.

No matter which setting you choose, always combine the ADX with other indicators for better results. 

Now that you know the best ADX settings, start testing them in your forex trading strategy and see what works best for you.