Trend

DMI

Directional Movement Index

Edited by GANGCO STUDIO · Updated

Contents DMI
  1. MACD
  2. Ichimoku Cloud
  3. Pivot Line
  4. DMI
  5. Parabolic SAR
  6. Aroon
  7. Supertrend
  8. Exponential Moving Average
  9. MA Golden Cross
  10. MA Dead Cross
  11. ADX
  12. RSI
  13. Stochastic
  14. SONAR
  15. TRIX
  16. CCI
  17. ROC
  18. Disparity Index
  19. Psychological Line
  20. Williams %R
  21. AB Ratio
  22. Ultimate Oscillator
  23. Volume Profile
  24. OBV
  25. MFI
  26. Volume Oscillator
  27. Volume Ratio
  28. AD Line
  29. EOM
  30. PVT
  31. CMF
  32. VWAP
  33. Force Index
  34. Bollinger Bands
  35. ATR
  36. Envelope
  37. Keltner Channels
  38. Donchian Channel
  39. Standard Deviation
  40. Chaikin Volatility
  41. Three White Soldiers
  42. Three Black Crows
  43. Morning Star
  44. Evening Star
  45. Hammer
  46. Inverted Hammer
  47. Hanging Man
  48. Shooting Star
  49. Doji
  50. Bullish Marubozu
  51. Bearish Marubozu
  52. Bullish Engulfing
  53. Bearish Engulfing
  54. Piercing Line
  55. Dark Cloud Cover
  56. Bullish Harami
  57. Bearish Harami
  58. Elder-Ray Index
  59. Coppock Curve

A trend indicator that shows, as two lines side by side, the force pushing highs higher (+DI) and the force pushing lows lower (−DI).

Weapon tier
Advanced
Slots used
Sub-charts 1/2
Created by
J. Welles Wilder Jr. · 1978

Concept

DMI (Directional Movement Index) compares “how much further today’s high went above yesterday’s” with “how much further today’s low went below yesterday’s”. The upward force is the plusDI line (+DI), and the downward force is the minusDI line (−DI).

When +DI is above −DI, the upward reach has been stronger lately; when it is below, the downward reach has been stronger. A cross where the two lines swap places is commonly read as a sign that the trend is changing.

  • plusDI
  • minusDI

Charts by TradingView Lightweight Charts™

80 candles with volume and the plusDI and minusDI lines in the panel. In the first part the price falls and minusDI is above plusDI. After moving sideways at the bottom, the price rises at candle 60 (arrow) and plusDI climbs above minusDI; the rise then continues. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.

At the arrow candle the two lines swapped places. Notice also that the price was pushed back once right after the cross and then rose again. A rise does not always follow a cross, and stretches where the two lines stay close and cross many times are common. Drag the chart sideways with a finger or the mouse to move it, and pinch with two fingers to zoom in. With a keyboard, click the chart, then use ←/→ to move and +/− to zoom.

How it is calculated

For each candle, find the “upward reach” (high − previous high) and the “downward reach” (previous low − low). Only the larger of the two, and only if it is above 0, counts as that side’s value (+DM or −DM); the other side is 0.

Also find the true range for each candle (the same as in ATR: the largest of high − low and the gaps to the previous close).

Smooth +DM, −DM and the true range each with a 14-candle Wilder average (every new value blends into the previous average with a weight of 1/14).

+DI = 100 × (average +DM ÷ average true range), and −DI = 100 × (average −DM ÷ average true range). Because they are divided by the size of the movement, expensive and cheap stocks can be read on the same scale.

Parameters

What it setsName in the gameDefaultRange
Candles used for the averages period 14 2 – 100

Trading ideas

Crosses: when +DI crosses above −DI it is commonly read as the up side, and when it crosses below, as the down side. The chart on this page shows a cross upward.

Spread: the wider the gap between the two lines, the clearer one side’s force. When they stay close together, it is seen as having no direction.

To measure the “strength” of a trend separately, the ADX built from these two is used. In the game, ADX is a separate weapon, “ADX”.

Common traps

  • In a sideways market the two lines tangle and keep crossing at short intervals. Buying and selling on every cross tends to pile up losses.
  • Because it is an average, it lags. By the time a cross appears, the price may already have risen a fair way from the bottom.
  • The chart on this page was chosen as a scene where the price rose after the cross. It does not always go that way.

In the game

  • “DMI” is a “Advanced” weapon and uses 1 of the “Sub-charts” panels (limit 2). Volume in the starting setup already uses 1, so adding DMI brings it to 2 (0 left).
  • The panel shows only the plusDI and minusDI lines. There is no ADX line.

Related indicators and lessons

  • MACD — A trend indicator that uses the gap between a fast and a slow exponential moving average to show whether the two averages are pulling apart or closing in.
  • Ichimoku Cloud — A trend indicator that uses five lines and a cloud to show at a glance where the price sits within its past price range.
  • Pivot Line — An indicator that uses the previous candle’s high, low and close to set five reference lines (Pivot, R1, R2, S1, S2) for the current candle in advance.
  • Parabolic SAR — An indicator that uses a single trailing “stop line” to show whether the price is in a rising or a falling stretch, and when it flipped.
  • Aroon — An indicator that judges whether a new trend has started by how long ago the recent high and low were made.
  • Supertrend — A trend indicator that keeps a single line above or below the price and uses its color and position to show whether the price is in an uptrend or a downtrend.
  • Exponential Moving Average — A line that averages recent closes with more weight on the newest ones, so it follows price changes faster than the simple moving average.
  • MA Golden Cross — An event marker that puts a vertical line on the candle where the short moving average crosses up through the long one.
  • MA Dead Cross — An event marker that puts a vertical line on the candle where the short moving average crosses down through the long one.
  • ADX — An indicator that shows, as a number from 0 to 100, how strongly the price is moving in one direction, whether up or down.
  • 2. Trends and sideways moves
  • 1. Reading a single candle