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Mastering Directional Movement Indicator for Profitable Trading

Learn how to use the Directional Movement Indicator (DMI) to identify trends in the stock market. Discover when to buy and sell based on upward or downward trends. Utilize the +DI, -DI, and ADX lines effectively for successful trading strategies.

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Mastering Directional Movement Indicator for Profitable Trading

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  1. DIRECTIONAL MOVEMENT INDICATOR USED TO DETERMINE IF A SECURITY IS TRENDING OR IF IT IS NOT TRENDING

  2. DIRECTIONAL MOVEMENT INDICATOR • BUY WHEN TRENDING UPWARD • SELL WHEN TRENDING DOWNWARD

  3. DIRECTIONAL MOVEMENT INDICATOR • FORMUAL IS TOO COMPICATED AND LONG • THE ONLY REAL WAY TO USE DMI IS WITH A COMPUTER AND TECHNICAL ANALYSIS SOFTWARE • IMPORTANT TO KNOW HOW TO USE AND WHAT YOU SEE WHEN ON YOUR SCREEN

  4. DMI HAS THREE SINIFICANT LINES • +DI • -DI • ADX

  5. DIRECTIONAL MOVEMENT INDICATOR • BUY WHEN +DI LINE CROSSES ABOVE –DI LINE • SELL WHEN +DI LINE CROSSES BELOW –DI LINE • ADX IS A SMOTHERED VERSION OF THE DIRECTIONAL MOVEMENTS

  6. THE EXTREME POINT RULE • DON’T BUY OR SELL THE DAY THE CROSS HAPPENS RATHER NOTE THE HIGH OR LOW OF THE DAY. THEN, WAIT UNTILL ON A SUBSEQUENT DAY THE PRICE REACHES THE HIGH OR LOW

  7. DIRECTIONAL MOVEMENT INDICATOR • 11 WEEKS IS THE OPTIMAL LENGTH FOR EVALUATING WEEKLY DATA

  8. EXAMPLE

  9. EXAMPLE

  10. EXAMPLE

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