Directional Movement Index (DMI) - Built-in Indicator Guide

Computes the Directional Movement Index (DMI) with +DI, -DI, and ADX lines to measure directional price movement strength.

Overview

The Directional Movement Index (DMI) is a momentum indicator that quantifies the strength and direction of price movements. It is commonly used to identify trending conditions and potential shifts in market momentum.

The indicator plots three lines: +DI (blue) for positive directional movement, -DI (maroon) for negative directional movement, and ADX (red) for the overall strength of the directional movement. The relative positions of +DI and -DI indicate the prevailing direction, while ADX shows how pronounced the movement is.

How it works

1. The indicator is declared with the name ‘DMI’ and a price format with 4 decimal places.
2. Two integer parameters are exposed: adx_len (default 14, min 1) for ADX smoothing, and di_len (default 14, min 1) for DI length.
3. Three plot lines are configured with specific colors and titles: -DI (maroon), ADX (red), +DI (blue).
4. In the Main function, Adx.new(adx_len, di_len) is called, which returns a tuple of three series: minus, adx, plus.
5. The current values of these series are obtained via [0] indexing and returned as a tuple for plotting.
6. The indicator updates on each bar, with the Adx algorithm maintaining internal state to compute the directional movements.

Parameters

Code walkthrough

Indicator and Parameter Configuration

Lines 6-8 of Directional Movement Index.indie5:

@indicator('DMI', format=format.PRICE, precision=4)  # Directional Movement Index
@param.int('adx_len', default=14, min=1, title='ADX Smoothing')
@param.int('di_len', default=14, min=1, title='DI Length')

The @indicator decorator registers the script as ‘DMI’ with a price format and 4 decimal places. Two @param.int decorators expose user-configurable smoothing lengths: adx_len for the ADX line and di_len for the directional movement lookback, both defaulting to 14.

Plot Line Definitions

Lines 9-11 of Directional Movement Index.indie5:

@plot.line(color=color.MAROON, title='-DI')
@plot.line(color=color.RED, title='ADX')
@plot.line(color=color.BLUE, title='+DI')

Three @plot.line decorators define the visual output: -DI in maroon, ADX in red, and +DI in blue. These colors and titles are used directly on the chart legend.

Main Function and Algorithm Call

Lines 12-14 of Directional Movement Index.indie5:

def Main(self, adx_len, di_len):
    minus, adx, plus = Adx.new(adx_len, di_len)
    return minus[0], adx[0], plus[0]

The Main function receives the two parameters and calls Adx.new(adx_len, di_len), which returns three series objects. The [0] indexing extracts the current bar’s value from each series, and the tuple is returned for plotting.

Reading the chart

• The +DI line (blue) represents the positive directional movement over the di_len period.
• The -DI line (maroon) represents the negative directional movement over the same period.
• The ADX line (red) shows the smoothed absolute difference between +DI and -DI, indicating the overall strength of the directional movement.
• When +DI is above -DI, upward momentum is dominant; when -DI is above +DI, downward momentum is dominant. A rising ADX suggests strengthening momentum, while a falling ADX indicates weakening.

Implementation notes

• The Adx algorithm is a built-in algorithm from indie.algorithms; its internal computation is not shown in this script.
• The indicator uses [0] indexing to get the current bar’s value from each series returned by Adx.new.
• Both parameters have a minimum value of 1, ensuring at least one period is used for calculations.
• The plot lines are defined with specific colors: maroon for -DI, red for ADX, blue for +DI.

FAQ

How do I adjust the sensitivity of the DMI?

Lower the di_len parameter to make the directional movement more responsive to recent price changes, or increase it for smoother, longer-term readings. The adx_len parameter controls the smoothing of the ADX line.

What do the different lines represent?

+DI (blue) shows positive directional movement, -DI (maroon) shows negative directional movement, and ADX (red) shows the overall strength of the directional movement.

Can I use this indicator on lower timeframes?

Yes, the indicator works on any timeframe. Adjust the di_len and adx_len parameters to suit the timeframe’s volatility and your analysis needs.

Full source code

Indie Script v5, the built-in indicator as shipped with TakeProfit. Add it from the indicators menu or copy the code into the platform’s script editor.

# indie:lang_version = 5
from indie import indicator, format, param, plot, color
from indie.algorithms import Adx


@indicator('DMI', format=format.PRICE, precision=4)  # Directional Movement Index
@param.int('adx_len', default=14, min=1, title='ADX Smoothing')
@param.int('di_len', default=14, min=1, title='DI Length')
@plot.line(color=color.MAROON, title='-DI')
@plot.line(color=color.RED, title='ADX')
@plot.line(color=color.BLUE, title='+DI')
def Main(self, adx_len, di_len):
    minus, adx, plus = Adx.new(adx_len, di_len)
    return minus[0], adx[0], plus[0]