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Впервые Direction indicator It was mentioned in a book by Welles Wilder "New Concepts in Technical Trading Systems". This trend indicator for the direction of the asset value.

DMI It is widely used in technical analysis to predict the strength of a trend. It is used not only traders binary options and forex. The indicator is calculated by the numerous formulas and automatically displays a live graph.

directional movement

directional movement

Direction indicator represented by three curved lines in a separate window below the chart, the price of the asset.

The pink line - The average direction of movement of ADX.

Orange Line - Focus indicator -DI.

Blue Line - Focus indicator + DI.

Directional Movement Indicator Signals on a live chart:

- ADX line as part of moves to 0 100. If it is below 25, the indicator may provide inaccurate signals, so by trading in such a case it is better to abstain.

- If the ADX line is below the lines and -AD + AD - means the market is not clearly marked trend. It is better to wait until the curve ADX line rises above -AD and + AD.

- If you see that growing line + DI, it is a signal to buy option CALL.

- If you see that growing line - DI, it is a signal to buy option PUT.

It is best to use the direction indicator in conjunction with other analysis tools assets.

The trade efficiency of this indicator increases in long-term trade. For short-term or scalping it is recommended to use other indicators.

At the core of its algorithm is the alignment of market forces between buyers and sellers. DMI allows not only to determine the emergence of a new trend and its direction, but also its strength. Its creator believed that during the trend, the price remains only 20-30% of its time. It spends the rest either on the formation of a trend in the form of randomness, or in a calm consolidation within a narrow outset.

The DMI-line of the indicator shows a downward trend, and DMI + is upward. ADX Moving is a kind of averaged index.

Among the obvious advantages of this indicator, it can be revealed that it is simultaneously able to successfully determine not only the trend itself, but also its strength. But its main drawback is to highlight the fact that it is completely inefficient with low volatility in the market. At this moment there are many false signals that should be removed with the help of other indicators.

By the way, the level of volatility in the market can be determined by the distance between the lines + DMI, -DMI. The more they diverge among themselves, the higher the activity. Well, if the lines often intersect each other, this indicates the presence of a side flat. At this moment it is better to wait and not to bargain.

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