This is the TimeToTrade help wiki. Use the TimeToTrade Trigger Trading Technology™ to execute your trades when Price, Candle Stick, Trend Line, Volume and Technical Analysis chart conditions are met - no coding required. Trade directly in the world’s global markets. Backtest your Trading Strategies. Calculate your UK HMRC Capital Gains Tax liabilities. Manage your Investment Club.
Average Directional Index
The Directional Movement Index is an oscillator that indicates whether or not a market is trending. The indicator consists of two lines: the Plus Directional indicator line (+DI) and the Minus Directional Indicator (-DI). They are usually plotted on the same chart as their associated moving average, the Average Directional Index (ADX).
The indicators range in value between 0 and 100. A low value indicates the trend is weak, a high value that the trend is strong.
The +DI measures how strongly the price is moving upwards. The -DI shows how strongly price is moving in a downward direction. +DI generally moves with price; if price increases +DI increases; as price decreases +DI decreases. –DI on the other hand, generally moves opposite to price, rising as price falls and falling as price rises.
If the +DI is above the –DI and rising, then the dominant trend is upwards. If the –DI is above the +DI and rising, then the dominant trend is downwards.
The +DI and -DI are shown in combination with the ADX indicator, which shows the strength of a current trend.
As with the DI, the ADX indicator fluctuates between 0 and 100. Unlike the +DI and –DI, the direction in which the ADX moves does not indicate if the trend if up or down, rather it shows if the trend is strong or weak. Values below 20 indicate a week non-trending market whilst values above 40 indicate a strong trend. The indicator is useful in providing a warning that the market is changing direction from trading sideways to trending (and vice-versa).
As a trend starts to emerge, the ADX will strengthen moving from below 20 to above 20. Further increases between 20 and 40 provide confirmation of an emerging trend; a value of 40 or above indicates that there is a very strong trend; then as the ADX again turns lower, this indicates the market is reversing the current trend.
The default period used to calculate the +DI and –DI is 14. This can be adjusted to suit your trading strategy and style.
Trading strategies that can be applied to the +DI, -DI and ADX indicator:
- Bullish signal: +DI crosses above -DI
- Bearish signal: -DI crosses above +DI
- ADX rising above 20 implies trend beginning to emerge
- ADX rising above 40 implies strong trend
- ADX falling implies change of trend
Average Directional Index Formula
The calculation of the ADX requires multiple steps. Firstly calculate the True Range by getting the maximum of the difference between the High, Low and previous Past Close price:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{True Range} = \displaystyle MAX \left ( (\text{HIGH } - \text{ LOW), (HIGH } - \text{ PAST CLOSE), (PAST CLOSE } - \text{LOW}) \right ) }
Now calculate the positive Directional Movement, which is the High minus the Past High, if the High minus the Past High is greater than the Past Low minus the Low, and the High is greater than the Past High:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{+DM} = \displaystyle \quad IF \qquad (\text{HIGH } - \text{ PAST HIGH }) > (\text{ PAST LOW } - \text{ LOW}) \qquad AND \qquad (\text{HIGH } > \text{ PAST HIGH}) \quad THEN \qquad (\text{HIGH } - \text{ PAST HIGH}) \quad ELSE \qquad 0 }
The negative Directional Movement is calculated using the same principals with the following formula:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{-DM} = \displaystyle \quad IF \qquad (\text{PAST LOW } - \text{ LOW }) > (\text{HIGH } - \text{ PAST HIGH }) \qquad AND \qquad (\text{LOW } < \text{ PAST LOW}) \quad THEN \qquad (\text{PAST LOW } - \text{ LOW }) \quad ELSE \qquad 0 }
The sum of the True Range and Directional Movement values on each interval is calculated over Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle n} periods, where the default is 14 periods:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{TRn} = \displaystyle \displaystyle \sum_{1}^n (\text{True Range}) }
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{+DMn} = \displaystyle \displaystyle \sum_{1}^n (\text{+DM}) }
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{-DMn} = \displaystyle \displaystyle \sum_{1}^n (\text{-DM}) }
On each incremental interval after the summation of the True Range and Directional Movement values over Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle n} periods, the summation values are adjusted by adding the True Range for the current interval and adjust the summation value using the following formula:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{TRn} = \displaystyle \text{TRn } - (\text{TRn } / n) + \text{True Range} }
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{+DMn} = \displaystyle \text{+DMn } - (\text{+DMn } / n) + \text{+DM} }
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{-DMn} = \displaystyle \text{-DMn } - (\text{-DMn } / n) + \text{-DM} }
where the default Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle n}
is typically 14.
Now calculate the positive and negative Directional Index, which is the summation of the Directional Movement divided by the summation of the True Range:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{+DI} = \displaystyle (\text{+DMn }/ \text{ TRn} ) * 100 }
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{-DI} = \displaystyle (\text{-DMn }/ \text{ TRn} ) * 100 }
To calculate the ADX, the Directional Index difference has to be calculated:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{DI Difference} = \displaystyle \text{Absolute Value of }(\text{+DI } - \text{ -DI}) }
Then calculate the sum of the Directional Index values:
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{DI Summation} = \displaystyle \text{+DI } + \text{ -DI} }
Lastly to calculate the ADX value, divide the DI Difference by the DI Summation
Failed to parse (MathML with SVG or PNG fallback (recommended for modern browsers and accessibility tools): Invalid response ("Math extension cannot connect to Restbase.") from server "https://api.formulasearchengine.com/v1/":): {\displaystyle \text{ADX} = \displaystyle \text{DI Difference } / \text{ DI Summation} }
Average Directional Index Indicator
The Average Directional Index indicator can be displayed on the TimeToTrade charts. To add the Average Directional Index indicator to the TimeToTrade charts, go to the chart settings and click on the 'Add Indicator' button. Click on the search box and type the name of the indicator that you are looking for, or for example type Average Directional Index and scroll through the results:
After adding the Average Directional Index indicator, within the chart settings, click on it to set the parameters and change colours.
Average Directional Index Alerts
Alerts can be set up to provide an Email or SMS text message notification of when your Average Directional Index indicator chart conditions have been met, backtest trading strategies or execute demo trades. To learn more:
It has never been easier to execute your trading strategy. Our Trigger Trading Technology ® means you can now automatically execute your trades directly in the world’s global markets.
You need never miss a trading opportunity again!
Do you want to:
- buy when your technical analysis chart conditions are met? Really buy, not just get an email or sms alert?
- or sell when a support trend line is broken?
- or back-test your strategy going back as far as 30 years?
TimeToTrade's Trigger Trading Technology™ is truly game changing. It gives you a trading advantage. The power to take your trading to a new level.
Open a FREE TimeToTrade account today to:
- Trade UK, US and European Shares - apply now
- Execute trades when your Price, Candlestick, Trend Line, Volume and Technical Analysis chart conditions are met using the Trigger Trading Technology® - learn more - help video
- Email and SMS Trigger Trading™ Alerts - learn more
- Trade Off The Chart - learn more
- Back Test Trading Strategies with up to 30 years of historical data - learn more
- Create Simulated Trading Accounts to test your Trigger Trading™ Strategies - learn more
- Real time Forex, UK, European and US stock market data - learn more
- 170+ Technical Analysis and Candlestick Pattern Indicators - learn more
- All the tools you need to set up and run a successful investment club - learn more
- Manage your Portfolio and calculate UK HMRC Capital Gains liabilities and SA 108 CGT Tax Returns - learn more
- Create Trading Competitions for you and your friends - learn more
- Apply for a trading account today to get the Live Account Features - apply now
Apply now to try our superb platform and get your trading advantage.
The information and data provided is for educational and informational purposes only. Interpretation and use of the information and data provided is at the user's own risk. All information and data on this website is obtained from sources believed to be accurate and reliable. However, errors or omissions are possible due to human and/or mechanical error. All information and data is provided "as is" without warranty of any kind. We make no representations as to the accuracy, completeness, or timeliness of the information and data on this site and we reserve the right, in its sole discretion and without any obligation, to change, make improvements to, or correct any errors or omissions in any portion of the services at any times. Past performance is not a guarantee of future results. Trading carries a high level of risk to your capital and can result in losses that exceed your deposits. It may not be suitable for everyone so please ensure you fully understand the risks involved.
All services are provided by TigerWit Limited. TimeToTrade is a trading name of TigerWit Limited (a company registered in England and Wales under number 9479466). Our Registered address is TigerWit, 7th Floor, Augustine House, 6A Austin Friars, London, EC2N 2HA, England. TigerWit Limited is authorised and regulated by the Financial Conduct Authority number 679941.
The trading services offered by TigerWit Limited are not available to residents of the United States and are not intended for the use of any person in any country where such services would be contrary to local laws or regulations. Subscriptions to TimeToTrade products are available if you are not eligible for trading services.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. All clients should be aware that trading involves risk.