DX

Modified on 2008/04/14 10:36 by Administrator — Categorized as: Standard Indicators

Syntax

public static DX Series(Bars bars, int period)

Parameter Description

Bars	The Bars object
period	Indicator period

Description

DX is a component of the Directional Movement System developed by Welles Wilder. This system attempts to measure the strength of price movement in positive and negative directions, as well as the overall strength of the trend. The DX is used in calculating the ADX indicator which is normally used with the DIPlus and DIMinus] indicators. Typically it uses 14 periods in its calculations. Normally you would not use the DX indicator as it whipsaws, use the ADX or ADXR.

Interpretation

DX measures the trendiness of a market, and ranges from 0 to 100. If the Trend is strong then the spread between the two smoothed directional lines (DIPlus and DIMinus) increases and the DX value increases. The higher the DX, the more directional movement present in the market.
If prices rise for the number of periods specified then the DIMinus value would be near zero and DIPlus would have a high value. This very directional upwards price movement results in a high DX value.
If prices fall for the number of periods specified then the DIMinus would be a high value and the DIPlus value would be near zero. This very directional downwards price movement result in a high DX value.
If prices fluctuate for the number of periods specified, like in a trading range, then DIPlus and DIMinus will have similar values. This non-directional sideways price movements results in a low DX value.

Calculation

DX = Round( 100 * |DIPlus - DIMinus| / |DIPlus + DIMinus| )

Example

using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;

namespace WealthLab.Strategies
{
	public class MyStrategy : WealthScript
	{
		protected override void Execute()
		{
			// Show how Average Directional Movement (ADX) relates to DX on the chart
			ChartPane ADXPane = CreatePane( 50, true, true );
			PlotSeries( ADXPane, DX.Series( Bars, 20 ), Color.DarkGray, WealthLab.LineStyle.Histogram, 3 );
			PlotSeries( ADXPane, ADX.Series( Bars, 20 ), Color.Blue, WealthLab.LineStyle.Solid, 3 );
		}
	}
}