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Registered User
Joined: 3/21/2005
Posts: 7
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I'm interested in the formula for calculating the Average Directional Movement Index. Other than buying Wilder's book, New Concepts in Technical Trading, would you have the formula as the ADX is displayed on your software as one of several indicators. Hopefully, the formula will give me the numbers of +DI and -DI, too. I would like to work with all three numbers.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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I do not know of a way to create an ADX Personal Criteria Formula short enough to be practical for use in TeleChart, but it is possible to create PCFs for the relative positions of +DI and -DI and to sort by ADX.
Average Directional Index (ADX)
Sorting by the ADX indicator
PCF for Wilder's Directional Movement DMI-crossovers
PCF for Wilder's DX, and/or a CI for Wilder's ADX
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Registered User
Joined: 3/21/2005
Posts: 7
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Yes, I reviewed your two training videos on the ADX indicator. They were very helpful and are one of the reasons I want to investigate further. The pcf formulas posted are far too lengthy to want to use. What I'm looking for is the original formula for the ADX Indicator. I thought that you might have it as it is set up on your software. If there is anyone out there who has the original formula, I would certainly appreciate it.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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I really can't point you to any third party sources (I would suggest an internet search), but the following is a basic list of the steps traditionally used to calculate ADX by hand (excluding some rules for rounding and initialization originally suggested by Wilder that are including in StockFinder but not included in TeleChart):
n = Period
TR = MAX(H-L,H-C1,C1-L)
ATRn = (Yesterday_ATRn*(n-1)+TR)/n
+DM = IF H>H1 AND H-H1>L1-L THEN H-H1 ELSE 0
-DM = IF L1>L AND L1-L>H-H1 THEN L1-L ELSE 0
+DMIn = (Yesterday_+DMIn*(n-1)+(+DM))/n
-DMIn = (Yesterday_-DMIn*(n-1)+(-DM))/n
+DIn = 100*(+DMIn)/ATRn
-DIn = 100*(-DMIn)/ATRn
DXn = 100*ABS((+DIn)-(-DIn))/((+DIn)+(-DIn))
ADXn = (Yesterday_ADXn*(n-1)+DXn)/n
ADXRn = (ADXn+nDaysAgo_ADXn)/2
You may alternately calculate ATRn, +DMIn, -DMIn and ADXn as follows:
ATRn = XAVG(TR,(2*n-1))
+DMIn = XAVG(+DM,(2*n-1))
-DMIn = XAVG(-DM,(2*n-1))
ADXn = XAVG(DXn,(2*n-1))
TeleChart allows you to use a different period for ADXn than is used for the previous steps. So if you used a DX Period of 9 and an Avg Period of 30, n = 9 for everything except ADXn, where n = 30 is used instead.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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