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DMI Filter
DMI filter checks any trading signal and validates or invalidates it according to the market's condition. This condition is determinated by the DMI value :

- Market in trend = ADX > threshold,
- Flat Market = ADX < threshold.
Default value for threshold is 17.

Filtering Example : DMI 14, threshold 17

DMI Filtering Example : DMI 14, threshold 17

Filtering Examples


DJI
Prices x MA 15

 DJI, Prices x MA 15


DJI
Prices x MA 15
DMI 14 Filter

 DJI, Prices x MA 15, DMI 14 Filter

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).
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