Dynamic Momentum Index

[rogerha]

Hi, Are there any plans to utilise EFS2 to revise the existing EFS for this excellent indicator by Chande ?

I have had a look at the EFS, but I am afraid the use of Array's is too complicated for me to reverse engineer and completely understand. I am particuarly interested in the calculation of the Std. Dev. Since everything else should be attainable with built-in functions, the rest should be relatively straightforward I would imagine.

Looking at it though, I feel sure it would be a worthwhile task to code it in EFS2 in order to make it more streamlined.

I would appreciate anybody's feedback on this.

[RuGO]

I second this opinion!

Formula:
SD = 5 period std. dev.
ASD = 10 period avg. of SD
DMI = 14/(SD/ASD)

Description:
Developed by Tushar Chande and Stanley Kroll, the Dynamic Momentum Index is quite similiar to Welles Wilder's Relative Strength Index. The differnce is the DMI uses variable time periods (from 3 to 30) vs. the RSI's fixed periods. 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. During quiet market conditions the DMI will use more time periods while less are used during more active markets. As a result, the DMI is more sensitive to fluctuations in the market and displays changes more rapidly than the RSI can.

Much like the RSI, Chande recommends using the DMI much the same as the RSI, with bearish conditions appearing at 70 or above and bullish conditions below 30. Remember, as the DMI is more sensitive to market dynamics, it often leads the RSI into overbought / oversold territories by one or two periods.