Our word of the day is “Directional Movement Index”

Directional Movement Index is an indicator developed by Welles Wilder, based on a scale

between 0 to 100, which rate whether a particular financial instrument is experiencing a trend

or not. Using this index can help you accurately make trades in the currency markets. DMI is

not to be confused with ATR as they both measure momentum. DMI and ADI are similar indicators.

ADX is an indicator used in technical analysis as an objective value for the strength of

trend. ADX is non-directional so it will quantify a trend's strength regardless of whether it

is up or down. ADX is usually plotted in a chart window along with two lines known as

the DMI or Directional Movement Indicators. ADX is derived from the relationship of the

DMI lines.