The Average Directional Index (ADX) is the industry-standard filter for trend strength. It ignores direction entirely, focusing solely on the velocity of price expansion. It allows systems to switch context: deploying trend-following logic when the market moves, and mean-reversion logic when it chops.
J. Welles Wilder Jr. was a mechanical engineer, and it shows. Introduced in *New Concepts in Technical Trading Systems* (1978), the ADX is a machine built from moving parts. It doesn't just smooth price; it deconstructs range expansion, normalizes it against volatility, and then smooths the result twice.
Because ADX relies on recursive smoothing (RMA) at multiple stages, it is notoriously slow to converge. A "cold" start requires at least $2 \times Period$ bars to produce data that even remotely resembles a mature series, and often $3-4 \times Period$ to match external libraries (like TA-Lib) within 4 decimal places.
Our implementation handles this by tracking the "warmup" state explicitly. We do not output garbage during the convergence phase if we can avoid it, but users must be aware that ADX is history-dependent.
The calculation path is hot. We use `stackalloc` for internal buffers and struct-based state management. There are no `new` keywords in the update loop. The memory footprint is fixed at initialization: 48 bytes for the state struct and a small ring buffer for the period window.
- **Period Sensitivity**: The standard period is 14. Lowering it (e.g., 7) makes ADX twitchy and prone to false positives. Raising it (e.g., 30) turns it into a geological indicator—accurate, but late.
- **The "Turn"**: ADX peaks *after* the trend has exhausted. It is a lagging indicator of trend strength, not a leading indicator of price reversal.
