The ADX Scalping Strategy is a technical analysis tool that was developed by Welles Wilder in 1978 and is used to determine the strength of a trend in the forex market. It is commonly used by traders to identify potential entry and exit points in the market, as well as to gauge the strength of a trend.
The ADX Scalping Strategy works by calculating the average directional index (ADX) of a currency pair over a given period of time. The ADX is a measure of the strength of a trend, with a reading above 25 indicating a strong trend and a reading below 20 indicating a weak trend.
What is the ADX Scalping Strategy?
The ADX Scalping Strategy is a popular strategy among traders due to its simplicity and effectiveness in identifying potential trades in the forex market. It is based on the concept of trend strength and is typically used in conjunction with other technical indicators to confirm entry and exit points.
- The ADX Scalping Strategy is based on the average directional index, which is a measure of trend strength.
- It can be used to identify potential entry and exit points in the market.
- It is often used in conjunction with other technical indicators to confirm trades.
ADX Scalping Strategy
- When the ADX is above 25, it indicates a strong trend.
- When the ADX is rising, it indicates that the trend is gaining strength.
- When the ADX +DI is above the -DI line, it indicates a strong uptrend.
- A weak trend is indicated when the ADX is below 20.
- The trend is losing strength when the ADX is falling.
- A strong downtrend is indicated when the ADX +DI is below the -DI line.
ADX Scalping Strategy Pros & Cons
- It is a simple and effective tool for identifying potential trades.
- It is based on a well-known and widely-used technical indicator.
- It is based on calculated and well precise market movement
- It does not provide information on the direction of the trend, only its strength.
- It has not risk control, It has no any feature to identify stop losses
- Not suitable to new trading as it requires time, effort and continues trade monitoring
The ADX Scalping Strategy is a popular tool among traders for identifying potential trades in the forex market. It is based on the average directional index, which is a measure of trend strength, and is typically used in conjunction with other technical indicators to confirm entry and exit points. While it has some drawbacks, such as the potential for false signals and a lack of information on trend direction, it can be a useful tool for traders who are familiar with technical analysis and are looking to capitalize on strong trends in the market. For example, a trader using the ADX Scalping Strategy may enter a long position in a strong uptrend and exit the trade when the ADX begins to fall, indicating a weakening trend.
The main problem that I have with the ADX Scalping Strategy is that it can be very dependant on the broker conditions. I find forex scalping systems work best with tight spreads, low commission fees and quick execution speeds. IC Markets are my top broker for manual and automated forex trading strategies. They have very good trading conditions in my experience, along with convenient funding options and excellent customer support.
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