- Bull Market = Ctrl MA slope > +threshold, - Bear Market = Ctrl MA slope < -threshold, - Flat Market = Ctrl MA slope between -threshold and +threshold.

There are two kinds of filter :
- 'Flat Market' Filter : all trading signals are invalidated during flat market,
- 'Trend Follower' Filter : a buying signal is valid if bull market is detected and a short-selling signal is valid on bear market only. All others trades are not valid (no trades during flat market and no counter-trend trades)...

The difficulty is that the MA slope may be very low (0.0x $ / day). So, the slope has been replaced by the MA momentum : (MA(J) - MA(J-N)) / MA(J-N), which correspond to the Ctrl MA performance on N days.

Filtering Examples

DJI Prices x MA 15
DJI Prices x MA 15 Flat Market Filter on MA 30
DJI Prices x MA 15 Trend Follower Filter on MA 30

Advantages and Disadvantages of DMI Filter
- Because of DMI inertia, the beginning and the end of a flat market are detected late. The first trades of a flat market are not invalidated while others are wrongly invalitaded. For example, the first trades of the flat market from nov 00 to june 01 are not invalitaded by the filter who did not detect the flat market.
+ Filtering removes a large part of flat market zones (the 'eagle nests' of the first graphic).
++ Filter settins can be adapted to the trading scope. In our trading example on MA 15, Ctrl MA length is 30. When trading on MA 50, Ctrl MA 101 is the best.