The Directional Movement Index (DMI) is a method of telling whether or not a security is trending. Invented in the late 1970s, the DMI helps investors determine whether or not a security is actually trending up or down, canceling out market “noise” that could be mistaken for trending.
The DMI takes into account the price range of trading (highs and lows) and calculations like the Welles Wilder’s Smoothing Average to find which way (if any) a stock is going. The DMI puts small windows of time into the larger context, helping traders have some idea of whether the stock is trending up or down. While there are many methods of analyzing stocks, the DMI is a basic one that’s used to this day for its baseline-like measures.
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Finance: What is program trading?14 Views
Finance a la shmoop what is program trading? okay well watch two episodes of
Big Bang Theory if you first watch one episode of Keeping Up with the [Man and woman watching TV]
Kardashians deal alright no different kind of program trading, program trades
in a Wall Street sense are run by a computer program, hence the catchy name
and it's also called the black box like a program kicks out that if the S&P 500
is down 0.3 percent in an hour and the US dollar has risen relative to the
pound and goog is outperforming the tech index and the moon is in the seventh
house and Jupiter is aligned with Mars then short a million shares of GE like
that would be something that the box would tell you or something like that
and there are a ton of weird mathy things behind the rationale for each of [Math formulas appear]
these trades some of it makes sense to normal people but most of it needs three
PhDs in math and physics and other stuff to translate rationally
well the dangerous thing here about program trades is that usually there is
no human involved when they execute a trade that is it's just computers
talking to other computers but thankfully computers never have glitches [Computer chip blowing off steam]
right they never have mistakes and things generally always run smoothly
when computers are involved right well this is a really smart way to manage
your retirement money just give it all to a black box and assume the guys who
wrote the algorithm knew what they were doing or maybe not [Hacker using a PC]
Up Next
What are position trading and swing trading? Get your mind out of the gutter. They're way more boring than they sound.
Trading volume is the number of shares trading back and forth at a given time.