Build Your Own Trading Bot
Step-by-Step Guide to Adding the ADX Indicator to Your Stock Trading Bot with Python, TA Lib, and Alpaca Markets
The Average Directional Movement indicator is a popular technical indicator that helps traders understand the strength of a trend. It’s particularly powerful for trading bots as it helps identify the type of market being experiences — and therefore which algorithm should be used.
For instance, when the ADX is low, this can indicate that market is trading in a range (known as trading sideways). This can indicate to your trading bot that it should NOT select a momentum-based trading algorithm. Alternatively, when the ADX is above 50, it can indicate that the market is gaining momentum…indicating a great time to switch to a momentum -based trading algorithm.
Adding this technical indicator to your trading bot can be a great way to help you automate more of your trading decision making.
You can read more about it here.
In this article, I’m going to show you how to add the ADX indicator to your trading bot.
