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Charting and Studies User Guide - CQG.com

Charting and Studies User Guide - CQG.com

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Page 250<br />

Directional Movement Index (DMI)<br />

Developed by Welles Wilder <strong>and</strong> explained in his book, New Concepts in Technical Trading<br />

Systems, the Directional Movement Indicator can be used by itself or as a filter on a trendfollowing<br />

system. The DMI helps determine if a security is trending.<br />

In a DMI study, two lines are generated: DMIu <strong>and</strong> DMId. The first line measures positive<br />

(upward) movement or buying pressure <strong>and</strong> the second number measures negative<br />

(downward) movement, reflecting selling pressure. The DMIu line crossing over the DMId line is<br />

interpreted as a buy signal, <strong>and</strong> the DMIu line crossing below the DMId line is considered a sell<br />

signal.<br />

Wilder also suggests that when a crossover occurs, the extreme price (the high or low made<br />

during the trading interval of the crossover) can be interpreted as a reversal point.<br />

This study is best used in any trending markets.<br />

For additional information: http://help.geckosoftware.<strong>com</strong>/40manual/indicators/dmi.htm<br />

Basic <strong>Studies</strong>

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