> For the complete documentation index, see [llms.txt](https://docs.skyrexio.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.skyrexio.com/strategy-builder/built-in-conditions/trend-indicators/average-directional-index-rating-14.md).

# Average Directional Index Rating (14)

### Introduction

The Average Directional Index Rating (14) is a **neutral trend strength indicator** that provides smoother, more stable trend measurements than the standard ADX. This indicator is designed for **long-term trend analysis** and **reduced whipsaws** in volatile markets, making it ideal for swing trading and position trading strategies.

### How Average Directional Index Rating (14) Works

The Average Directional Index Rating (ADXR) was developed by J. Welles Wilder Jr. as a smoothed version of ADX to reduce volatility and provide more stable trend strength readings. The calculation averages the current ADX with the ADX from n periods ago: **ADXR = (Current ADX + ADX from n periods ago) / 2**.

ADXR characteristics: • **Smoother readings** than ADX, reducing false signals in volatile markets\
• **Stable trend measurement** - better for identifying sustained trend strength\
• **Reduced whipsaws** - filters out short-term ADX fluctuations\
• **Confirmation tool** - validates ADX signals and trend persistence

{% hint style="info" %}
**Market Psychology:** ADXR represents the "sustained conviction" behind market movements. While ADX can spike temporarily, ADXR shows whether trend strength is genuinely persistent or just a brief surge. This makes it invaluable for identifying trends worth following versus temporary momentum bursts.
{% endhint %}

#### Key Characteristics

| Attribute        | Details                                               |
| ---------------- | ----------------------------------------------------- |
| **Category**     | Trend Indicators                                      |
| **Type**         | Neutral Trend Strength Indicator                      |
| **Primary Use**  | Long-term trend analysis and stable trend measurement |
| **Timeframe**    | All timeframes supported (1m to 1M)                   |
| **Confirmation** | ADX comparison, directional indicators, volume        |

### Strategy Applications

#### 🟢 LONG STRATEGY (Context-Dependent)

{% hint style="success" %}
Use ADXR for LONG strategies when **ADXR > 25** confirms sustained trending conditions AND **+DI > -DI** confirms bullish direction.
{% endhint %}

**Base Entry Order (LONG)**

```
Trigger Type: Once per bar close
Bar TF: 4H

First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Value
Value: 25

AND

First Condition: Plus Directional Indicator (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Minus Directional Indicator (14)
Timeframe: 4H
```

**Additional Entry Orders (LONG)**

```
Additional Entry 1: Sustained trend strength confirmation
First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Average Directional Index (14)
Timeframe: 4H

AND

First Condition: Volume
Timeframe: 4H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 4H

OR

Additional Entry 2: Higher timeframe alignment
First Condition: Average Directional Index Rating (14)
Timeframe: 1D
Operator: Greater Than
Second Condition: Value
Value: 30

AND

First Condition: Close Price
Timeframe: 4H
Operator: Greater Than
Second Condition: Exponential Moving Average (50)
Timeframe: 4H
```

**Take Profit Orders (LONG)**

```
Rule 1: Exit condition - Sustained trend weakness
First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Less Than
Second Condition: Value
Value: 20

OR

Rule 2: Exit condition - Directional momentum shift
First Condition: Minus Directional Indicator (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Plus Directional Indicator (14)
Timeframe: 4H

OR

Rule 3: Exit condition - Long-term momentum exhaustion
First Condition: RSI
Timeframe: 1D
Operator: Greater Than
Second Condition: Value
Value: 70
```

**Stop Loss Orders (LONG)**

```
Rule 1: Stop loss - Sustained trend failure
First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Less Than
Second Condition: Value
Value: 16

OR

Rule 2: Stop loss - Stable bearish shift confirmed
First Condition: Minus Directional Indicator (14)
Timeframe: 4H
Operator: Cross Above
Second Condition: Plus Directional Indicator (14)
Timeframe: 4H

OR

Rule 3: Stop loss - Volume pattern breakdown
First Condition: Volume
Timeframe: 4H
Operator: Less Than
Second Condition: Simple Moving Average (50)
Timeframe: 4H
```

#### 🔴 SHORT STRATEGY (Context-Dependent)

{% hint style="success" %}
Use ADXR for SHORT strategies when **ADXR > 25** confirms sustained trending conditions AND **-DI > +DI** confirms bearish direction.
{% endhint %}

**Base Entry Order (SHORT)**

```
Trigger Type: Once per bar close
Bar TF: 4H

First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Value
Value: 25

AND

First Condition: Minus Directional Indicator (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Plus Directional Indicator (14)
Timeframe: 4H
```

**Additional Entry Orders (SHORT)**

```
Additional Entry 1: Persistent bearish strength
First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Average Directional Index (14)
Timeframe: 4H

AND

First Condition: Volume
Timeframe: 4H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 4H

OR

Additional Entry 2: Multi-timeframe bearish alignment
First Condition: Average Directional Index Rating (14)
Timeframe: 1D
Operator: Greater Than
Second Condition: Value
Value: 30

AND

First Condition: Close Price
Timeframe: 4H
Operator: Less Than
Second Condition: Exponential Moving Average (50)
Timeframe: 4H
```

**Take Profit Orders (SHORT)**

```
Rule 1: Exit condition - Sustained bearish weakness
First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Less Than
Second Condition: Value
Value: 20

OR

Rule 2: Exit condition - Directional momentum reversal
First Condition: Plus Directional Indicator (14)
Timeframe: 4H
Operator: Greater Than
Second Condition: Minus Directional Indicator (14)
Timeframe: 4H

OR

Rule 3: Exit condition - Oversold bounce potential
First Condition: RSI
Timeframe: 1D
Operator: Less Than
Second Condition: Value
Value: 30
```

**Stop Loss Orders (SHORT)**

```
Rule 1: Stop loss - Sustained trend reversal
First Condition: Average Directional Index Rating (14)
Timeframe: 4H
Operator: Less Than
Second Condition: Value
Value: 16

OR

Rule 2: Stop loss - Stable bullish shift confirmed
First Condition: Plus Directional Indicator (14)
Timeframe: 4H
Operator: Cross Above
Second Condition: Minus Directional Indicator (14)
Timeframe: 4H

OR

Rule 3: Stop loss - Volume surge against position
First Condition: Volume
Timeframe: 4H
Operator: Greater Than
Second Condition: Simple Moving Average (100)
Timeframe: 4H
```

### Advanced Strategy Combinations

#### ADXR vs ADX Comparison Strategy

{% tabs %}
{% tab title="Setup" %}
**Stability Confirmation:**

* **ADXR > ADX:** Trend strength is building and sustainable
* **ADXR < ADX:** Current trend strength may be temporary
* **ADXR = ADX:** Stable trend strength conditions
  {% endtab %}

{% tab title="Execution" %}
**Entry:** ADXR > 25 + ADXR > ADX + directional alignment\
**Target:** ADXR declining below 20\
**Stop:** ADXR < 16 or directional reversal
{% endtab %}
{% endtabs %}

#### Long-Term Position Trading Framework

{% hint style="info" %}
**ADXR Position Trading Setup:**

**Daily ADXR > 30:** Strong long-term trend

* Use for major position entries
* Hold for extended periods
* Wider stop losses acceptable

**4H ADXR 25-30:** Moderate trend strength

* Standard position sizing
* Regular monitoring required
* Medium-term holds

**ADXR < 25:** Weak trend strength

* Avoid new positions
* Consider exits from existing positions
* Focus on range-trading approaches

**Execution Framework:**

* **Base Order:** Higher timeframe ADXR confirmation
* **Additional:** Lower timeframe ADXR alignment
* **Take Profit:** ADXR trend strength deterioration
* **Stop Loss:** ADXR failure or directional shift
  {% endhint %}

### Risk Management Guidelines

#### Position Sizing Based on ADXR

| ADXR Level     | Position Size | Hold Period | Risk Level  |
| -------------- | ------------- | ----------- | ----------- |
| **ADXR > 35**  | Full size     | Long-term   | Low         |
| **ADXR 25-35** | Standard size | Medium-term | Medium      |
| **ADXR 20-25** | Reduced size  | Short-term  | Medium-High |
| **ADXR < 20**  | Minimal/Avoid | N/A         | High        |

#### ADXR Reliability Factors

{% tabs %}
{% tab title="High Reliability" %}
✅ ADXR > ADX (building strength)\
✅ Multi-timeframe ADXR alignment\
✅ Sustained ADXR levels over time\
✅ Clear directional bias with +DI/-DI
{% endtab %}

{% tab title="Low Reliability" %}
❌ ADXR oscillating around 20-25\
❌ ADXR << ADX (temporary spike)\
❌ Conflicting timeframe signals\
❌ Low volume with high ADXR
{% endtab %}
{% endtabs %}

### Best Practices

#### For Long-Term Strategies

{% hint style="success" %}

1. **Higher timeframes** - Use 4H, Daily, or Weekly for ADXR analysis
2. **Patience required** - ADXR signals develop slowly but are more reliable
3. **Sustained levels** - Look for ADXR staying above 25 for multiple periods
4. **Volume confirmation** - Ensure volume supports the trend strength
   {% endhint %}

#### For Swing Trading

{% hint style="warning" %}

1. **ADXR > ADX preferred** - Confirms trend strength is building
2. **Multi-timeframe** - Verify ADXR alignment across timeframes
3. **Directional clarity** - Always confirm with +DI/-DI comparison
4. **Wider stops** - Use larger stop losses due to longer-term nature
   {% endhint %}

#### Common Mistakes to Avoid

{% hint style="danger" %}

* **Impatience** - ADXR moves slowly; don't expect quick signals
* **Ignoring ADX** - Compare ADXR to ADX for context
* **Wrong timeframe** - ADXR works best on higher timeframes
* **No direction** - ADXR doesn't show trend direction, only strength
  {% endhint %}

### Market Conditions Analysis

| Market Type             | ADXR Effectiveness     | Recommended Approach               |
| ----------------------- | ---------------------- | ---------------------------------- |
| **Sustained Uptrend**   | 🟢 High (ADXR > 30)    | LONG position trading              |
| **Sustained Downtrend** | 🟢 High (ADXR > 30)    | SHORT position trading             |
| **Choppy Markets**      | 🟡 Medium (ADXR 20-25) | Reduced positions                  |
| **Ranging Markets**     | 🔴 Low (ADXR < 20)     | Avoid trend strategies             |
| **Volatile Markets**    | 🟢 High                | ADXR filters noise better than ADX |

### Related Indicators

| Indicator                             | Relationship            | Link                                                                                                                       |
| ------------------------------------- | ----------------------- | -------------------------------------------------------------------------------------------------------------------------- |
| **Average Directional Index (ADX)**   | Base indicator for ADXR | [ADX](https://docs.skyrexio.com/strategy-builder/built-in-conditions/trend-indicators/average-directional-index-14)        |
| **Directional Index (DX)**            | Raw calculation basis   | [DX](https://docs.skyrexio.com/strategy-builder/built-in-conditions/trend-indicators/directional-index-14)                 |
| **Plus Directional Indicator (+DI)**  | Bullish direction       | [+DI](https://docs.skyrexio.com/strategy-builder/built-in-conditions/trend-indicators/plus-directional-indicator-14)       |
| **Minus Directional Indicator (-DI)** | Bearish direction       | [Minus DI](https://docs.skyrexio.com/strategy-builder/built-in-conditions/trend-indicators/minus-directional-indicator-14) |

### Conclusion

{% hint style="info" %}
Average Directional Index Rating (14) is primarily a **long-term trend strength indicator** that provides more stable and reliable readings than ADX. Its main value lies in identifying sustained trends worth following for extended periods.
{% endhint %}

#### Key Takeaways

{% hint style="success" %}

* **PRIMARY USE**: Long-term trend strength analysis and position trading
* **SECONDARY USE**: Swing trading with sustained trend confirmation
* **STABILITY FOCUS**: Smoother readings reduce false signals
* **ALWAYS**: Compare with ADX and confirm direction with +DI/-DI
  {% endhint %}

Success with ADXR requires patience and understanding that it's designed for longer-term analysis. Use it to identify trends worth holding for extended periods, and combine with directional indicators for precise entry and exit timing.

{% hint style="info" %}
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{% endhint %}