Glossary

ADX (Average Directional Index)

By Rohan Fernandes, Founder · Updated 2026-08-22 · Educational reference, not investment advice

ADX measures whether a directional trend exists, on a 0-100 scale, without saying which direction: readings below ~20 mark range-bound tape, above ~25 an established trend. It is the regime filter that decides what every directional indicator's reading means.

ADX answers the question the other indicators assume: is there a trend here at all? Range-bound readings favor mean-reversion structures like iron condors; trending readings favor directional spreads and make oscillator extremes unreliable. Because short-window trend statistics are noisy, careful regime logic pairs ADX with a second signal (such as Bollinger band width) rather than letting one number declare the regime.

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