Average Directional Index Rating


Function Name: adxr

Tags: None

Category: Trend

The Average Directional Index Rating is basically an average of the ADX. This has the effect of smoothing the ADX values. It rates a market according to its movement by returning a value between 0 and 100. The higher the number, the greater the movement.

As with the ADX, a rising ADXR might indicate a strong underlying trend while a falling ADXR suggests a weakening trend subject to a reversal. ADXR can also identify non-trending markets or the deterioration of an ongoing trend. Although market direction is important in its calculation, the ADXR is not a directional indicator.

The ADXR differs from ADX in that the ADXR is less sensitive to short, quick reversals because the ADXR results in a "smoother" calculation. The ADXR was developed to compensate for the variance of excessive tops and bottoms. The ADXR is especially helpful when used in conjunction with trend-following strategies. Strategies that rely on volatility as an indication of movement may not take into account that movement does not necessarily indicate volatility. ADXR provides information pertaining to the strength of a trend, helping you to manage the risk of trading in volatile markets that fluctuate between trending and non-trending.


Source: http://www.investorwords.com/6411/average_directional_movement_index_rating.html





Default Value: 14  |  Minimum: 2  |  Maximum: 9999


Type: Numeric