DMI indicator, also called trend indicator or trend indicator, was created by the American technical analysis master Wells Wilder. It is a medium and long-term stock market technical analysis method. So, how to use the DMI indicator? So today the editor is here to sort out the stock-related knowledge for you, let’s take a look!
How to use the DMI indicator
The DMI indicator is By analyzing the changes in the equilibrium point of the power of buyers and sellers during the rise and fall of stock prices, that is, the changes in the power of long and short parties are affected by price fluctuations, resulting in a cyclical process from equilibrium to imbalance, thereby providing a basis for trend judgment. Technical indicators.
The PDI line breaks through the MDI line from bottom to top, indicating that new longs have entered the market, which is a buy signal; the PDI line falls below the MDI line from top to bottom, indicating that new short positions have entered the market, which is a sell signal. ; When the ADX value continues to be higher than the previous day, the market will maintain the original trend; when the ADX value decreases, drops below 20, and moves sideways, the market atmosphere is consolidation; when the ADX value changes from an upward trend to a downward trend, it indicates that the market is about to reverse.
DMI indicator 4 colored lines
It is understood that trend indicators include ADX and ADXR. ADX and ADXR are the guiding indicators of +DI and -DI, ??and are also used to judge the stock market. Trend indicator. When ADX crosses ADXR from above, the intersection formed is called a dead cross. When ADX and ADXR form a dead cross, the stock's rising trend will end. If ADX and ADXR fall to around 20 and intersect, it means that the stock will move sideways. , there is no rising market. When ADX reverses downward above 50, it is about to reverse regardless of whether the stock price is rising or falling.
The four colored lines of the DMI indicator are white, red, green, and yellow, which represent buying, selling, holding stocks and waiting, and holding currency. The trend indicator DMI (divided into four colors of white, yellow, red and green) is reflected on the four lines +DI (PDI), -DI (MDI), ADX and ADXR, whether it is the market or individual stocks, it is the same.
Indicator parameters of dmi
It is understood that the rising trend value and falling trend value within n days are divided by the true amplitude value within n days, so as to calculate the rising trend value within n days. Indicator + DI and falling indicator - DI; through the ratio of the difference between the rising indicator + DI and the falling indicator - DI within n, the daily trend value DX is calculated. Accumulate DX over a certain number of days and average it to obtain the average trend value ADX within n days.
In the indicator parameter setting of dmi, when the N value is different, the results will be different. Generally, it will be 6, 12 or 9, 12, or 5, 10. This is based on your actual combat experience and you can choose the one that suits you. The value of research and judgment. The application of DMI indicator in futures, the PDI line breaks through the MDI line from bottom to top, indicating that new longs have entered the futures market, which is a buying signal; the PDI line falls below the MDI line from top to bottom, indicating that new shorts have entered the market, which is Sell ??signal.
dmi indicator buying and selling function
The calculation method and process of the DMI indicator are relatively complex. It involves several calculation indicators such as DM, TR, DX and +DI, DI, ADX and ADXR Wait for the calculation of 4 research and judgment indicators. In the calculation formula of the DMI indicator, ADXR = (ADX of the current day + ADX of the previous day) ÷ 2. Like the calculation of other indicators, due to the different calculation periods selected, the DMI indicator also includes daily DMI indicator, weekly DMI indicator, and monthly DMI. Various types of indicators include annual DMI indicators and minute DMI indicators.
As for the buying and selling function of the DMI indicator, when the four curves of PDI, MDI, ADX and ADXR in the DMI indicator undergo narrow consolidation in a narrow area near 20, if the PDI curve breaks through MDI, When the ADX and ADXR curves and the stock price also break through the medium and long-term moving average upward with volume, it means that the main bulls in the market are relatively strong and the stock price will enter a strong upward stage in the short term. This is a buy signal sent by the DMI indicator. When the four curves of PDI, MDI, ADX and ADXR in the DMI indicator are arranged in a wide range from 20 to 40.
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