| FEB 1988
Wilder's Directional Movement Index System Part 2 by Jim Summers, Ph.D.
Wilder's Directional Movement Index System Part 2 by Jim Summers, Ph.D. As I noted in the last issue, I need both a charting program and Lotus 1-2-3 to trade with discipline and confidence, along with maintaining my emotional health. My first major programming task for Lotus 1-2-3 came about when I recognized the limits of charting software. The first indicator we'll systemize is J. Welles Wilder Jr.'s Directional Movement Index (DMI). However, only when we understand what the indicator is supposed to do does it make sense to test it or incorporate it into our trading plans. Thus, actual Lotus 1-2-3 work will have to wait. Scholarship You may wonder why I chose Wilder's DMI. After all the DMI is available in nearly every technical analysis package. The reasons for this choice are a good example of the value of scholarship. Briefly described, the charted portion of the DMI system consists of three lines. The ADX, or average directional movement index, is supposed to tell us if a trend is in effect or not. The other two lines— +DI14 and -DI14, the up and down 14-day average of directional movement—are supposed to be issuing buy or sell signals when they cross one another. Figure 1 illustrates the two DI lines on the December 1986 S&P 500 contract.
by Jim Summers, Ph.D.
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.