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ADX Trend-Strength Filtered DI EntryWilder DMI system

Evidence: WeakIntermediateTrend Following · Indicator-based

ADX measures the strength of a trend, not its direction. Direction comes from the crossover of +DI and −DI.

Trade only when ADX is above a threshold of 25, and rising, and the DI cross confirms the direction. All three conditions are mandatory.

Category
Trend Following · Indicator-based
Timeframe
H4 · D1
Suitable pairs
USDJPY · AUDUSD · USDCAD · GBPUSD · XAUUSD
Session
Signal at the bar close · execute in London or New York
Indicators / tools
ADX(14) · +DI(14) · −DI(14) · ATR(14) · optional EMA(50)

Valid setup

S04 · ADX>25 RISING + DI CROSS — VALID SETUP (SHORT) AUDUSD · H4 · ADX measures strength only; direction comes from the DI cross SHORT 0.6438 0.6493 0.6547 0.6601 0.6655 0.6710 0.6764 ENTRY = next bar open SL = entry + 2×ATR(14) +2.5R reference 1R +2.5R 1 2 3 4 5 ① ADX < 20 — range. No trades allowed here. ② ADX turns up through 20 as price breaks down ③ ADX > 25 AND rising AND −DI crosses above +DI ④ Entry next bar open ⑤ Exit when ADX falls 5+ points from its peak, or on the opposite DI cross. If ADX > 45 at signal time → skip the entry: late-stage trend, reversal risk. 0.6674 0.6643 0.6567 EMA 50 ADX>25 + DI cross ADX(14) / +DI / −DI 20 range 25 trigger 45 late ADX +DI −DI

Exact rules

Entry

  • ADX(14) above 25 and rising — its value now above its value three bars ago.
  • Sell when −DI crosses above +DI. Buy on the reverse.
  • Optional confirmation: the close on the correct side of the EMA(50).
  • Enter at the next bar's open.
  • Skip it if ADX is above 45 — that is a late-stage trend and the reversal risk is high.
  • Robustness add-on worth testing: require ADX above 25 for three consecutive bars, and above where it was five bars ago. This addresses the flicker problem.

Stop loss

  • Entry ± 2 × ATR(14).
  • Alternative: 0.5 × ATR beyond the recent swing high or low.
  • Risk 0.5%–1%.

Take profit / exit

  • Primary: a trailing ATR stop.
  • Signal exit: ADX falling five or more points from its peak, or the opposite DI cross.
  • An optional partial at 2.5R. ADX entries are late, so keep your expectations for R realistic.

Build ADX Trend-Strength Filtered DI Entry

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Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.