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DIRECTIONAL MOVEMENT INDICATOR

DIRECTIONAL MOVEMENT INDICATOR. USED TO DETERMINE IF A SECURITY IS TRENDING OR IF IT IS NOT TRENDING. DIRECTIONAL MOVEMENT INDICATOR. BUY WHEN TRENDING UPWARD SELL WHEN TRENDING DOWNWARD. DIRECTIONAL MOVEMENT INDICATOR. FORMUAL IS TOO COMPICATED AND LONG

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DIRECTIONAL MOVEMENT INDICATOR

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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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