Directional Movement Oscillator for Comparing Positive and Negative DI
Summary
This document describes a Directional Movement Oscillator built from the difference between smoothed positive and negative directional indicators. It computes directional movement from changes in highs and lows, normalizes each side by smoothed true range, and smooths the resulting difference with a moving average to create a signal line. The indicator is plotted around a zero line to show which directional force is stronger.
The included strategy code attempts to enter long or short based on the oscillator and signal line, with DI length and smoothing length as parameters. The document provides BTC/USDT futures backtest settings, but reports no performance results. Its trading conditions are not well specified: the code tests indicator values as booleans and does not provide explicit exits or risk controls. Treat the strategy implementation as illustrative rather than validated evidence.
Key ideas
- The oscillator subtracts smoothed negative directional movement from smoothed positive directional movement.
- True range is used to normalize directional movement.
- A moving average of the oscillator serves as a signal line.
- The example supplies BTC/USDT futures backtest settings but no reported performance.
- The entry conditions and risk controls in the code are unclear.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.