Stock Predictor trading strategy

Directional Movement

The Directional Movement Index (DMI), developed by J. Welles Wilder, consists of the Positive Directional Indicator (+DI), which measures upward price movement, and the Negative Directional Indicator (−DI), which measures downward movement. The Average Directional Index (ADX), a smoothed average of the difference between them divided by their sum, shows how strong the trend is: values above 25 indicate a strong trend, values below 25 a weak or range-bound market.

Strategy group: Trend and money flow strategies
Based on: +DI and −DI (DMI)
Typical parameters: m = 14 days

This strategy buys when +DI crosses above −DI and sells when +DI crosses below −DI.

Trading signals

Buy when +DI crosses above −DI.
Sell when +DI crosses below −DI.

Strategy rules

IF +DI(m) >= -DI(m)
   THEN GO LONG
ELSE IF +DI(m) <= -DI(m)
   THEN GO SHORT

Where +DI and −DI are the positive and negative directional indicators averaged over m periods.