As a permission
ADX below 20 AND your mean-reversion condition. The trend filter comes first and the signal only counts when the regime allows it.
Screens
The filter thatdecides whether yourother signals count
Most indicator failures are regime failures: a mean-reversion rule applied in a trend, or a breakout rule applied in a range. ADX is the cheapest way to tell those apart, and it is a condition you can put in front of everything else.
What ADX says and what it does not
Strength, not direction
ADX is built from the directional movement indicators but deliberately throws the sign away. A high ADX means the market is moving decisively; it does not say up. Traders who read it as bullish are reading a number that would look identical in a crash.
The conventional bands, and their honest status
Below 20 is usually called ranging, above 25 trending, above 40 strong. These are conventions, not constants — they came from daily equity data decades ago, and crypto on a 15-minute chart is a different animal. Treat them as a starting point you then check against your own firing history.
It lags, and that is the trade-off
ADX is a smoothed average of a smoothed average, so it confirms a trend well after the trend started. That makes it a poor entry trigger and a good filter. Screening for "ADX rising through 25" gives you late entries; screening for "ADX below 20" to permit a mean-reversion rule gives you a regime gate that is worth having.
Warm-up is not the same as first value
A smoothed indicator produces a number long before that number is stable. Ours are warmed up deliberately — a regime label computed from too few bars flipped its answer on a tenth of all bars, which is a filter that is worse than no filter. The series a screen reads is the series a backtest reads, warm-up included.
How to use it in a screen
As a breakout confirmation
ADX above 25 AND price out of a range you defined — the range break plus evidence that the move has force behind it.
As a rank
The strongest-trending pairs in your universe right now, rather than every pair over a fixed threshold.
With the higher timeframe
Daily ADX as a condition on an hourly screen: trade the hourly setup only when the daily regime agrees.
Questions about ADX
Which period should I use?
14 is the convention. Shorter makes it responsive and noisy — which defeats the point, since you are using it to smooth out noise in the first place.
Does a high ADX mean I should buy?
No. It means the market is trending. Which way is what the directional components, or simply the price, tell you. This is the mistake the indicator most reliably produces.
Can I screen on ADX rising rather than a level?
Yes — a condition on the change as well as the level. Rising from 15 to 22 and falling from 40 to 22 are opposite situations that a level test cannot distinguish.
Put a regime filter in front of your screens
Free paper accounts run the whole screener against live data.