ADX is good for day trading when used as a trend-strength filter, helping you trade only when momentum is strong enough to justify the intraday risk. Readings above 25 and rising confirm a tradeable trend, while readings below 20 suggest sideways movement that can lead to false breakouts.
The typical 14-period setting works for most traders, but day traders often shorten it to 7 to 10 periods for quicker signals.
Since ADX does not predict direction but tells you whether the market is worth trading, pair it with the +DI and −DI lines or a moving average to confirm whether to go long or short.
It is a lagging indicator, which makes it better as a confirmation tool than a standalone entry signal.
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