Directional Movement Index - DMI

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DEFINITION of 'Directional Movement Index - DMI'

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.

INVESTOPEDIA EXPLAINS '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.

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RELATED FAQS
  1. What are common trading strategies when using the Directional Movement Index (DMI)?

    The directional movement index, or DMI, is a useful momentum indicator for assessing price direction and trend strength. ... Read Full Answer >>
  2. How do I use the Directional Movement Index (DMI) for forex trading?

    The directional movement index, or DMI, is a momentum indicator use to determine the existence of a trend and trend strength, ... Read Full Answer >>
  3. Why is the Directional Movement Index (DMI) important for traders and analysts?

    J. Welles Wilder Jr. created the directional movement index (DMI) to identify whether or not a security is trending. DMI ... Read Full Answer >>
  4. How can I build a trading strategy based on the Aroon indicator?

    One of the primary goals of technical market analytics is to identify performance trends in individual securities or indexes. ... Read Full Answer >>
  5. Why does the efficient market hypothesis state that technical analysis is bunk?

    The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >>
  6. What are the advantages and disadvantages of using systematic sampling?

    As a statistical sampling method, systematic sampling is simpler and more straightforward than random sampling. It can also ... Read Full Answer >>
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