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Trend scan

ADX Screener: Strong Trend Starting

This scan finds stocks where ADX (14) crossed above 25 on the latest day while +DI is above −DI. In plain words: a strong trend is forming, and it points up.

Run this scan in the live demoFree, no sign-up. The demo uses made-up sample data.

The exact rule

Type this in Chalni: adx crossed above 25 and +di above -di

  1. ADX(14) crossed above 25
  2. +DI(14) > −DI(14)

Find US stocks where ADX (14) crossed above 25 today; and +DI (14) is above −DI (14).

Formula view
crosses_above(adx(14), 25)
AND plus_di(14) > minus_di(14)
Example chart: Strong trend starting (ADX)Daily candles of a made-up sample stock with Lower panel: ADX (amber), +DI (blue), −DI (grey), dotted line at 25. The shaded day is the day the scan fired.
  • Lower panel: ADX (amber), +DI (blue), −DI (grey), dotted line at 25
  • Shaded day: the scan fired
Example from Chalni's made-up sample market, not a real stock. It shows the most recent time this scan fired in the sample US market, picked whether or not the trade worked.

What it means

ADX, the Average Directional Index, was created by J. Welles Wilder in 1978. It measures how strong a trend is, not which way it goes. Readings below 20 usually mean no clear trend; above 25 is often called a strong trend.

The direction comes from two partner lines: +DI (buying pressure) and −DI (selling pressure). When ADX rises through 25 with +DI on top, the stock is moving from a sideways phase into a strong move up.

How traders use it

  • Trend traders use it to find stocks leaving a range and starting a trend.
  • Pair it with a breakout rule so that price and ADX agree.
  • Some traders exit when ADX turns down from a high level, a sign the trend is slowing.

Watch out for

  • ADX is slow because it is an average of an average. Part of the move happens before it crosses 25.
  • A high ADX can also mean a strong downtrend. That is why this scan also needs +DI above −DI.

Test it before you trust it

Every scan in Chalni sits an exam. First it runs on older data, the practice: each time it picks a stock, the stock is held for 10 trading days and 0.2% is paid in costs. Then it runs on newer data it has never seen, the exam. A scan that only works in practice has just memorised the past.

See the practice and exam results for this scan in the demo (on sample data; real data comes at launch).

Questions

What is a good ADX value?

Below 20 suggests no trend, 20 to 25 a trend may be forming, above 25 a strong trend, and above 40 a very strong one. These are rules of thumb, not laws.

Does ADX show direction?

No. ADX only shows strength. Use +DI and −DI for direction: +DI above −DI points up.

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