Abbreviation: ADX
Category: Price Momentum Indicators
Input Parameters:

 
Calculation:

ExpAvg(X, Avg Periods)

where
X = DMI(High Price, Low Price, Closing Price, DMI Periods)

DMI represents Directional Movement Index (DMI)
ExpAvg represents Exponential Moving Average

 
Discussion:

ADX measures the strength of a market trend. A high ADX value indicates a strong market trend, while a low ADX value indicates a weak market trend.

In general, this indicator is simply smooths the Directional Movement Index indicator by calculating its moving average. Since it uses an exponential moving average (which gives more importance to the most recent periods than to less recent periods), the smoothing is influenced most by recent periods.
Difference between NeuroShell’s ADX indicator and Wilder’s Original ADX:

Note that NeuroShell’s ADX indicator is based upon TradeStation’s ADX implementation and is therefore different from Wilder’s original. The ADX uses two exponential moving averages (EMAs). NeuroShell Trader’s EMA period has a different meaning as compared to Wilder’s original EMA period, because Wilder used a different type of EMA. Here is how they relate to each other:

NeuroShell Trader’s EMA period = Wilder’s EMA period * 2 – 1 

This applies to both the Averaging Periods parameter and the DMI Periods parameter.

For example, suppose you want to match Wilder’s indicator using two periods of 14 bars each. To be able to re-create the results in NeuroShell Trader, you should use 14*2-1=27 bar periods for both averaging periods and DMI periods.

NeuroShell Trader’s version of ADX matches Wilder’s when you use (Wilder’s EMA period * 2 – 1) value for the period parameter.