Stock Exchange and Market Analysis
Technical Analysis (22)
DMI basic idea indicator is in the process of ups and downs in the stock price , according to a new high or a new low stocks of kinetic energy , judged both long and short trading strength of growth and decline and the plate potential equilibrium with each other to pull data , in order to identify high and low band signals a turning point , provide investors out of the stock market basis . use DMI typically used when the trend line three indicators , namely rising index line (+ DI, Positive Directional On indicator), drop the index line (-DI, Negative Directional On indicator) and the average trend indicator line (ADX, Average Directional Movement Index ) , all of which can set the period , generally based on 14 days . In order to judge the energy accumulated by both parties in the disk , the calculation process of DMI index is more complicated , and the daily market must be calculated first. Positive and negative trend change value DM (Directional Movement,Also known as innovation amplitude values ) and the true amplitude value TR (True Range), then seek three n Amended moving average + ADM , - ADM and ATR in order to calculate the value of a positive direction indicators + DI (Positive Directional On Indicator ) and negative direction index value -DI (negative Directional indicator ) . Then use the difference and ratio of the two to calculate the directional value DX ( Directional Movement Index ), and finally calculate the n- day average trend value ADX by correcting the moving average . Next, let us according to DMI import mathematical formulas Excel spreadsheet :
+DM0 t : a first t day and t-1 the highest price day ( H t and H t -1 ) the initial comparison of the two values .
+DM0t = Ht －Ht -1 (when Ht > Ht -1 )
+DM0 t = 0 ( when H t ≤ H t -1 )
-DM0 t : a first t day and t-1 lowest day ( L t and L t -1 ) the initial comparison of the two values .
-DM0t = Lt-1 －Lt (when Lt-1 > Lt )
-DM0t = 0 ( when L t-1 ≤ L t )
+DMt : is the first t day and t-1 the highest price day ( H t and H t -1 ) final comparison of the two values .
-DMt : is the first t day and t-1 lowest day ( L t and L t -1 ) final comparison of the two values .
The two values can be determined by the following judgment :
+DM t = +DM0 t , -DM t = 0
( when +DM0 t > -DM0 t )
+DM t = 0 , -DM t = -DM0 t
( when +DM0 t < -DM0 t )
+DM t = 0 , -DM t = 0
( when +DM0 t = -DM0 t )
It can be seen from the above formula that +DM t and -DM t must be greater than or equal to 0.
TR t : a first t date real amplitude value , for the first t highest day , the lowest of the first t-1 Room closing price Day three largest difference . Detailed the following formula :
DTRt = Ht－Lt:
Of t highest price H t first t daily low L t difference between the two.
DTRHt = | Ht－Ct-1 |:
Of t highest price H t first t-1 closing price of C t-1 the absolute value of the difference .
DTRLt = | Lt－Ct-1 |:
Of t days Low L t first t-1 closing price of C 1-t. the absolute value of the difference.
TR t = max ( DTR t , DTRH t , DTRL t ):
Is the maximum of DTR t , DTRH t and DTRL t
And + the DM t , -DM t and TR t of n daily averages + the ADM t , - ADM t and the ATR t formula is as follows :
+ADMt= +ADMt-1 + (+DMt －+ADMt-1) / n
-ADM = -ADMt-1 + (-DMt －-ADMt-1) / n
ATR t = ATR t -1 + ( TR t - ATR t -1 ) / n
Finally, find +DI t , -DI t , DX t and ADX t : ( where n is usually taken as 14 days)
+ DI t = +ADM t / ATR t
-DI t = -ADM t / ATR t
DX t = | +ADM t - -ADM t | / (+ADM t + -ADM t ) * 100
ADXt = ADXt-1 + (DXt －ADXt-1) / n
The DMI indicator represents the extent to which the stock price is chasing high or low in the rising or falling stage . It is a representation of the strength of the long- selling force . Its application principles can generally be classified into the following points for reference :
1. +DI is the indicator of the upward trend of the stock price , and its value is increasing, indicating that the long market starts . The opposite -DI is the direction indicator of the stock price decline , and its value is increasing, indicating that the bears gain an advantage . When the two cross each other , the market is about to Reversal , from the bottom to the top began to press from the top to the other side , gradually gaining the advantage of the disk , the sale of signals also emerged , ready to wait for an opportunity to enter and leave .
2. The ADX indicator represents the magnitude of the multi-space force enhancement . When both +DI and -DI cross each other , if ADX is also gradually enhanced , it represents a new trend is emerging . When the ADX value breaks through 20, it represents the establishment of the market , investors Should operate with the trend , +DI from the bottom up is a long market , and vice versa -DI from the bottom up is a short market .
3. When ADX continues to be high , showing high-end hovering , indicating that the market is in the overbought or oversold phase , the market may be reversed at any time , investors should not be able to operate at this time , should pay attention to the ADX reverse downwards change signal .
4. When ± DI value very close and intertwined , ADX will usually hover in the low-end , if its value is less than 20 or less , more representative of the stock in a consolidation phase , investors should wait patiently waiting to start a new wave of market signals .
Although the above is the general rule of entering and exiting stocks , due to the complicated calculation principle of DMI indicators , it is a medium- and long-term operation index , especially when ADX is in a low-end hovering , the indicator signal is not obvious , and the stocks are different , it is best to use with KD and RSI indicators . and observe the subject matter of at least one year and then control the price trend of the technical specifications for a modest correction is appropriate . Finally, for the convenience of the reader utilize DMI indicators , the author still Makalot modeled (template), continue to produce the Excel analysis format Sample for reader's reference :
template22.xlsx
In addition to this sample " historical stock price " provides spreadsheet + DI, -DI and ADX of DMI reference index outside , the second spreadsheet provides the candlestick graph , volume and DMI trend line for FIG. Reader's reference . If you have any mistakes, please correct me . Thank you !In addition , the author for all types of stock analysis indicators ( moving average , RSI, BIAS, stochastic KD line, William indicators , MACD, CDP and Bollinger bands, etc. ) produced EXCEL spreadsheet for reference use , and further production of candlestick charts and other technical indicators on the same chart , interested readers can refer to Ref.1.
Reference (Ref):
1. Investment Financial Notes - Stock Technical Analysis
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