Dynamic Trend Momentum Indicator (DTMI)
factor.formula
DTM:
DBM:
STM:
SBM:
DTMI:
DTMIMA:
in:
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The opening price of the day. This price reflects the market's initial valuation of the stock at the opening of the day.
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The previous day's opening price. This price is used as a benchmark to compare the fluctuation direction of the current day's opening price.
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The highest price of the day. This price reflects the highest transaction price reached by the stock driven by the market sentiment of the day.
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The lowest price of the day. This price reflects the lowest transaction price reached by the stock driven by the market sentiment of the day.
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The upward momentum of the day. If the opening price of the day is lower than the opening price of the previous day, DTM is 0; otherwise, the maximum value of the difference between the highest price of the day and the opening price or the difference between the opening price of the day and the opening price of the previous day is taken to indicate the maximum upward fluctuation of the day.
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Downward momentum for the day. If the opening price of the day is higher than or equal to the opening price of the previous day, DBM is 0; otherwise, the maximum value of the difference between the opening price of the day and the lowest price or the difference between the opening price of the previous day and the opening price of the day is taken to indicate the maximum downward fluctuation of the day.
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The sum of the DTMs over the past N trading days represents the accumulation of upward momentum over a period of time.
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The sum of the DBMs over the past N trading days represents the accumulation of downward momentum over a period of time.
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The window size for calculating STM and SBM represents the time period of accumulated momentum. The default value is 23, which can usually be adjusted according to different trading cycles and strategies. The larger the N value, the lower the sensitivity of the indicator, and vice versa.
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Dynamic trend indicator. Indicates the relative strength of long and short forces. When STM is greater than SBM, DTMI is the proportion of long forces; when STM is less than SBM, DTMI is the proportion of short forces; when STM is equal to SBM, DTMI is 0, indicating a balance between long and short forces.
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The window size for calculating DTMIMA represents the period of moving average smoothing. The default value is 8, which can usually be adjusted according to different trading cycles and strategies. The larger the M value, the smoother the moving average is and the less sensitive it is to price fluctuations.
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Simple moving average of DTMI. By smoothing the DTMI, its volatility can be reduced, thus reflecting the trend direction more clearly.
factor.explanation
The Dynamic Directional Movement Index (DTMI) measures market sentiment and buying and selling pressure by comparing the upward and downward fluctuations of the opening price. The core of the indicator is to use the relative position of the opening price of the day and the opening price of the previous day and the highest and lowest prices of the day to calculate the long and short momentum, and construct buy and sell signals accordingly. The value range of DTMI is between -1 and +1. The closer the value is to +1, the stronger the market sentiment is to buy, and the closer the value is to -1, the stronger the market sentiment is to sell. When DTMI is lower than -0.5, it can be regarded as a low-risk area, indicating that the market may be oversold and the possibility of future increases is high; when DTMI is higher than +0.5, it can be regarded as a high-risk area, indicating that the market may be overbought and the possibility of future declines is high. In terms of trading strategy, when the DTMI line breaks through its moving average (DTMIMA) upward, it is regarded as a buy signal, indicating that the market buying power is increasing; when the DTMI line breaks through its moving average downward, it is regarded as a sell signal, indicating that the market selling power is increasing. This indicator is suitable for short-term operations and trend tracking strategies. It should be noted that the DTMI indicator may also become blunt, so it should be used in combination with other indicators or analysis methods in actual use to improve the accuracy of trading decisions.