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.

  1. Wilder's DMI (ADX)

    Three lines compose the Direction Movement Indicators (DMI): ...
  2. Financial Instrument

    A real or virtual document representing a legal agreement involving ...
  3. Inverted Spread

    A situation in which the yield difference between a longer term ...
  4. Allocated Funding Instrument

    A specific type of insurance or annuity contract that pension ...
  5. Negotiable Instrument

    A document that promises payment to a specified person or the ...
  6. Trending Market

    A market that is trending in one direction or another. A bull ...
Related Articles
  1. Trading

    DMI Points the Way to Profits

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

    The ADX Shows Strong Uptrends In These 4 Stocks

    The ADX shows trend direction as well as the strength of the trend. Right now, it's signaling strong trends in these four stocks.
  4. Insights

    Far-Right Populism Spreads to the Netherlands

    The success of far-right campaign pledges in the Netherlands offer another reminder of the growing popularity of protectionism in key global economies.
  5. Investing

    Texas Instruments Trades Ex-Dividend Thursday

    Texas Instruments will send its dividend payment on May 15 to shareholders of record as of May 1.
  6. Tech

    The Most Important Technical Indicators For Binary Options

    Trading binary options is not for the novice, but if you're ready to delve in, get to know the best technical indicators.
  7. Insights

    European Populism Hits its First Speed Bump

    Far-right candidate Geert Wilders comes up short in the Netherlands parliamentary election.
  8. Trading

    Top Day Trading Instruments

    Day trading is an intense and often appealing activity. Investopedia provides the list of top financial instruments for day trading.
  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. 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 >>
  4. 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 >>
  5. What are the best technical indicators to complement the Parabolic Indicator?

    Learn about two of the best technical indicators recommended for traders to use to refine a trading strategy based on the ... Read Answer >>
Hot Definitions
  1. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  2. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  3. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  4. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  5. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  6. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
Trading Center