The traditional Directional Movement Index ( DMI ) is quite noisy, hence we experimented with our own version of DMI using JMA. The result is our "DMX", in which we injected JMA into the classic DMI formula.
The bottom half of this chart shows the DMX oscillator and the upper half shows how DMX might be used to generate trading signals. In this example, The DMX oscillator is paired with a trailing moving average (dashed line). There are two ways to enter long trades: when DMX crosses over the zero line and is above the dashed trailing line (trade "B"), or when DMX crosses over the trailing line and is above zero (trade "A"). Long positions are exited when DMX crosses under the trailing line. Similar (mirror image) rules were used for short trades. The blue lines link winning trades, and red lines link losing trades.
The trading strategy shown
above is NOT included with the Jurik Technical Indicator Toolset.
This was shown for demonstration purposes only.
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