ADX TRENDS

The average directional index (ADX) is a technical analysis indicator used by traders and investors to determine the strength of a trend. ADX helps to get clarity on the persistence of the trend. Using ADX one can assess whether a trade should be taken long or short, or if a trade should be taken at all.

LOADING THE UNIVERSE

We shall now see how to run the ADX Algos on the universe of our choice. The first step would be to select the particular pre-defined universe from the dropdown box as shown. One can also create watchlist of preferred stocks on which the Algo could be executed before being showcased for trading / investing.

TIMEFRAME

Depending on the risk profile of the subscriber he can choose the particular timeframe to drill down to the stocks that are in action. Once that is done status of stocks as per this timeframe shall be displayed.

ACTIVE STOCKS

By default, the “Trending” feature on this page is disabled as shown below. These will address the 30-60 min time frame.

This feature should be enabled to find out stocks that are showing some trended movement in the chosen timeframe.

Screen when no stock or security has satisfied the trending criteria for the time frame selected -

Screen when any stock or security has satisfied the trending criteria are displayed for the time frame selected-

STOCKS CLASSIFICATION

Bullish

Bullish bias readings are interpreted through the degree of ADX readings displayed by the stocks. Based on the readings, shades of green color are used to grade the quality of the signal. This is represented by the shades moving from light green to dark green.

Bearish

Bearish bias readings are interpreted through the degree of ADX readings displayed by the stocks. Based on the readings, shades of red color are used to grade the quality of the signal. This is represented by the shades moving from light red to dark red.

Neutral

Absence of trend in a particular stock rules it out from trading or investing. This is represented by the grey shades for all the stocks.

SCORING

Immediately below the name of the security is a numerical rank assigned to judge the quality of signal. Higher the number the stronger is the ADX trend. . 1 is the initial phase of the trend, 2 when the momentum trend has started. 5-7 is where the exhaustion generally takes place.

There is also color shading depending on the rank of the trend (Buy / Sell / Neutral).The intensity of the color increases as the rank increases

Every security name that appears will have four circles at the bottom that represents the timeframe (30 m / 60 m / D / W). Each circle will either be in green, red or grey.

Green circle signals that the security is showing positive readings in that timeframe. Red circle indicates negative readings while grey circle refers to neutral.

Stock Selection

Seeing the number of stocks in bull and bear can give an idea as to what the trend in the market is, as the trend will be tilted to the side which has max candidates.

The four circles that you see are a one-glance view of all trends 30/60/D/W time frames.

If it is green then the ADX line is rising in that time frame and the DI lines are positive. If it is red then ADX is trended with DI negative. So, ideal for a trended stock is multiple circles being green or red. If it is colored grey then ADX line is down and trend is missing.

The time frame selection is on the top of the screen (drop down menu for 30-60- D-W). The scores you see are relevant to the time frame chosen. So, for eg, if Muthoot Fin is shown in green in 30 min, it means that the ADX is rising in the 30 min charts. The score shows how strong the trend is in that time frame. Muthoot Fin has the strength of 3, so trend has begun displaying some trended action.

The same names will also feature on the ADX trends section in Expert Alerts page under Intraday.