Directional Movement Index
A pair of lines measuring upward and downward directional movement separately, from which the ADX is derived.
Formula
+DM = Current High - Previous High when positive and larger than -DM; -DM = Previous Low - Current Low when positive and larger than +DM; each is smoothed and divided by ATR to give +DI and -DI
Unit
ratio (x, times)
In depth
The DI lines supply the direction that ADX deliberately discards, so the three are designed to be read together rather than separately. Only one of +DM and -DM can be non-zero in a period, since the larger of the two moves is taken and the other set to zero — a detail that surprises people expecting both to register on a wide-range day. Dividing by average true range normalises the values, which makes them comparable across securities. Crossings of the DI lines are the conventional signal, and no claim is made here about what follows one.
Worked example
Today's high exceeds yesterday's by ₹8 while today's low is ₹3 above yesterday's low. +DM is ₹8 and -DM is zero, because the low moved up rather than down — an inside or outside day would change this entirely.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Directional Movement Index” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.