This indicator plots Dynamic Momentum Index indicator. The Dynamic Momentum

Index (DMI) was developed by Tushar Chande and Stanley Kroll. The indicator

is covered in detail in their book The New Technical Trader.

The DMI is identical to Welles Wilder`s Relative Strength Index except the

number of periods is variable rather than fixed. The variability of the time

periods used in the DMI is controlled by the recent volatility of prices.

The more volatile the prices, the more sensitive the DMI is to price changes.

In other words, the DMI will use more time periods during quiet markets, and

less during active markets. The maximum time periods the DMI can reach is 30

and the minimum is 3. This calculation method is similar to the Variable

Moving Average, also developed by Tushar Chande.

The advantage of using a variable length time period when calculating the RSI

is that it overcomes the negative effects of smoothing, which often obscure short-term moves.

The volatility index used in controlling the time periods in the DMI is based

on a calculation using a five period standard deviation and a ten period average

of the standard deviation.

Index (DMI) was developed by Tushar Chande and Stanley Kroll. The indicator

is covered in detail in their book The New Technical Trader.

The DMI is identical to Welles Wilder`s Relative Strength Index except the

number of periods is variable rather than fixed. The variability of the time

periods used in the DMI is controlled by the recent volatility of prices.

The more volatile the prices, the more sensitive the DMI is to price changes.

In other words, the DMI will use more time periods during quiet markets, and

less during active markets. The maximum time periods the DMI can reach is 30

and the minimum is 3. This calculation method is similar to the Variable

Moving Average, also developed by Tushar Chande.

The advantage of using a variable length time period when calculating the RSI

is that it overcomes the negative effects of smoothing, which often obscure short-term moves.

The volatility index used in controlling the time periods in the DMI is based

on a calculation using a five period standard deviation and a ten period average

of the standard deviation.

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//////////////////////////////////////////////////////////// // Copyright by HPotter v1.0 24/04/2014 // This indicator plots Dynamic Momentum Index indicator. The Dynamic Momentum // Index (DMI) was developed by Tushar Chande and Stanley Kroll. The indicator // is covered in detail in their book The New Technical Trader. // The DMI is identical to Welles Wilder`s Relative Strength Index except the // number of periods is variable rather than fixed. The variability of the time // periods used in the DMI is controlled by the recent volatility of prices. // The more volatile the prices, the more sensitive the DMI is to price changes. // In other words, the DMI will use more time periods during quiet markets, and // less during active markets. The maximum time periods the DMI can reach is 30 // and the minimum is 3. This calculation method is similar to the Variable // Moving Average, also developed by Tushar Chande. // The advantage of using a variable length time period when calculating the RSI // is that it overcomes the negative effects of smoothing, which often obscure short-term moves. // The volatility index used in controlling the time periods in the DMI is based // on a calculation using a five period standard deviation and a ten period average // of the standard deviation. //////////////////////////////////////////////////////////// study(title = "Dynamic Momentum Index (DMI) ") RSILen = input(14, minval=1) BuyZone = input(30, minval=1) SellZone = input(70, minval=1) UpLimit = input(30, minval=1) LoLimit = input(5, minval=1) bbz = hline(0, color=gray, linestyle=dashed) bz = hline(BuyZone, color=green, linestyle=line) sz = hline(SellZone, color=red, linestyle=line) ssz = hline(100, color=gray, linestyle=line) xStdDev = stdev(close, 5) xSMAStdDev = sma(xStdDev, 10) DTime = round(14 / xSMAStdDev - 0.5) xDMI = iff(DTime > UpLimit, UpLimit, iff(DTime < LoLimit, LoLimit, DTime)) xRSI = rsi(xDMI, RSILen) pl = plot(xRSI, style=line, linewidth=1, color=blue) fill(bz, bbz, color=green) fill(sz, ssz, color=red)