Directional Movement Index - DMI

What is the 'Directional Movement Index - DMI'

The directional movement index (DMI) is an indicator developed by J. Welles Wilder for identifying when a definable trend is present in an instrument. That is, the DMI tells whether an instrument is trending or not.

BREAKING DOWN 'Directional Movement Index - DMI'

The scale for the DMI is from 0 to 100. The average directional movement index (ADX) is a moving average of the DMI.

RELATED TERMS
  1. Wilder's DMI (ADX)

    Three lines compose the Direction Movement Indicators (DMI): ...
  2. Average Directional Index - ADX

    An indicator used in technical analysis as an objective value ...
  3. Financial Instrument

    A real or virtual document representing a legal agreement involving ...
  4. Aroon Indicator

    A technical indicator used for identifying trends in an underlying ...
  5. Primary Instrument

    A financial investment whose price is based directly on its market ...
  6. Instrument

    1) A tradeable asset or negotiable item such as a security, commodity, ...
Related Articles
  1. Trading

    DMI Points The Way To Profits

    The directional movement index tells you whether to go long, short or stand aside.
  2. Trading

    Trading Without Noise

    False signals can drown out underlying trends. Find out how to tone them down and tune them out.
  3. Markets

    Understanding Financial Instruments

    Financial instrument is a general term used to describe a monetary asset.
  4. Trading

    Finding Market Movement With The ADX

    Take a closer look at this indicator, which refines your insight into the strength of a prevailing trend.
  5. Trading

    Exploring Oscillators and Indicators: Average Directional Index

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The average directional index (ADX) is a trend indicator used to measure the strength and momentum of an existing trend. ...
  6. Trading

    (Un)Mapping the Trend

    Much has been said about using trend analysis to gauge the market, but what do we really know about the concept "trend"?
  7. Trading

    Arbitrage

    Learn more about this trade that profits from price differences between financal instruments and markets.
  8. Markets

    Debentures

    Learn more about this type of debt instrument.
  9. Trading

    Overbought Or Oversold? Using The RSI To Find Out

    The Relative Strength Index is a technical indicator that measures the velocity and magnitude of changes in a stock’s price.
  10. Trading

    Overbought Or Oversold? Use The Relative Strength Index To Find Out

    The Relative Strength Index comes in handy when identifying areas that are potentially overbought or oversold.
RELATED FAQS
  1. Why is the Directional Movement Index (DMI) important for traders and analysts?

    Read about the concepts behind J. Welles Wilder Jr.'s directional movement index (DMI), a technical indicator designed to ... Read Answer >>
  2. How do I use the Directional Movement Index (DMI) for forex trading?

    Learn how to incorporate the directional movement index, or DMI, into a forex trading strategy to better pinpoint trade entries ... Read Answer >>
  3. What are common trading strategies when using the Directional Movement Index (DMI)?

    Use the directional movement index, or DMI, to determine strength of buying and selling pressure in a market and for keys ... Read Answer >>
  4. How do technical analysts interpret the Average Directional Index (ADI)?

    Learn what the average directional index is and why technical analysts look towards ADX indicators to measure the strength ... Read Answer >>
  5. What is the Directional Movement Index (DMI) formula and how is it calculated?

    Discover the formulas used to calculate the three parts of the directional movement index: +DI, -DI and the average directional ... Read Answer >>
  6. Who developed the relative strength index (RSI)?

    Discover who created the relative strength index (RSI), a popular technical analysis tools that measures the velocity of ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center