Recently, someone asked me how to determine whether a trend is real or fake. Actually, many people get one key point wrong.

Most traders only focus on the direction when looking at indicators, but those who make real money care about whether the trend is strong or not. That’s why I always recommend using the ADX indicator; it can directly tell you whether the market is truly moving.

Simply put, the ADX indicator is a tool to measure the strength of a trend. It consists of three lines: the main ADX line shows the strength, DI+ indicates upward momentum, and DI- indicates downward momentum. The most practical way to interpret it is by looking at the ADX value. When ADX is above 25, whether the market is rising or falling, it indicates a genuine, powerful trend. If it’s below 20, it’s basically sideways, and traders dislike this dull market.

My personal trading habit is to combine the ADX indicator with RSI. For example, if RSI enters the overbought zone and ADX is also above 25, it’s time to be alert for a potential breakout or reversal. Another tip is that when ADX starts rising from below 20, it often signals that the market is waking up, so you can prepare to enter early. Conversely, when ADX is still below 20, I generally avoid trading because the market is in sleep mode.

Adding the ADX indicator on TradingView or Binance is super simple: open the chart, click on indicators, search for ADX, activate it, and then you’ll see three lines below the chart.

The key is to understand a logic: many people see a trend and rush in without asking themselves whether the trend has enough strength. Using the ADX indicator can quickly answer this question. Whether the trend is strong or just a fake, it’s clear at a glance.