Description

• This indicator was developed by J. Welles Wilder
• This identifies a definable trend present in an instrument
• The DMI is the ratio of the exponential moving averages of the greater of the upward and downward price movements, and the true range

Interpretation

• In an upward trend, today’s highest price is higher than yesterday’s highest price
• In a downward trend, today’s lowest price is lower than yesterday’s lowest price

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• DM Period

Returns/Output

DMI of the stock

Formula

PDI=CSum(PDM,R1)/CSum(TR[X],R1)
NDI=CSum(NDM,R1)/CSum(TR[X],R1) for R1=1..DIperiod
where PDI and NDI are Positive and Negative Directional Index respectively
TR[X] indicates True Range
TR[X]=Max((H[X]-L[X]),abs(H[X]-C[X-1]),abs(L[X]-C[X-1]))
Change in Dir.Mov. Index DX[X]=100*(PDI[X]-NDI[X])/(PDI[X]+NDI[X])