DMI Indicator

bigtimetrader

Junior member
47 2
I average between $500 - 1000 per day trading with the DMI/ADX (Directional Movement Index/ Average Directional Index) through the DAS PRO software.

DMI/ADX works for any trading style from day trading to swing or position trading. I combine the ADX/DMI onto one study. DMI is actually made up of 2 sub indexes the PDI (Plus Directional Index) and the MDI (Minus Directional Index). I make the ADX line white in color, the PDI line red, and the MDI line green. The DAS software makes it easy because it already combines ADX/DMI into one study. Although, I'm pretty sure most softwares out there also have DMI/ADX (it's very common), I think it's easiest to use and understand when they are combined on one study.

This is how I do it:
When white (ADX) crosses the other lines and is at the top and green (MDI) is at the bottom (red in the middle), it's a buy. White on top red (PDI) on the bottom (green in the middle), it's a sell. Often the simplest things work best and this seems simple and it is, but it works very good. I consistently make between .02 -.05 cents on 2000 - 5000 share trades. I usually go for more around the open (maybe .05-.10 or more). I ONLY trade widely traded Nasdaq stocks, like CSCO and INTC. I use 1 minute and 3 minute intraday charts to day trade. As I said it can also work for swing trading if you use a longer time frame chart.

You can try this theory out by going to the http://www.realfasttrader.com website and using their "free simulator", which lets you try the DAS PRO software free for a week. Test the DMI like I stated above, it has been working GREAT for me for several years now.

If you have any questions, post them and I will try to answer.
 
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ChartMan

Legendary member
5,580 46
At 2 - 5 cents per 2000- 5000 is a bit poor....Others on here wouldn't bother to get out of bed for anything less than 75 cents... Have you tried using 20 MA/10 MA crossover? :cheesy:
 

bigtimetrader

Junior member
47 2
ChartMan said:
At 2 - 5 cents per 2000- 5000 is a bit poor....Others on here wouldn't bother to get out of bed for anything less than 75 cents... Have you tried using 20 MA/10 MA crossover? :cheesy:

That comes across as a rather negative and condescending remark. I'm sure you make .75 on day trades everyday, right? :rolleyes:

Do the math, .02 - .05 is certainly not poor. We are talking about day trading here. You can generally do that 15-20 x a day with this strategy. Like I said I might take .10 (maybe more) around the open or close. Day trading has more to do with quantity of positive trades than quality (of large moves). Any positive day trade is good at 3000 or more shares... even .01

See if this would make enough sense to "get out of bed for".
Look at the low end as an example:
3000 shares x .02 = $60 (US)
$60 x 15 trades = $900 (conservatively would be at least $700 net after commission)

Lets say you do even worse than that, you average $500 net after commissions. $500 x 253 trading days a year = $126,500 a year (that's net after commissions). You can certainly do better, but remember this is a low end estimate and most people would be happy with even that much.

.75 is nice, but that will happen far more often swing trading than day trading. Unless you are playing very volatile stocks, which can be very dangerous as well. Since (depending on your source) upwards of 80% of day traders lose money, I think most people would be happy with $500 - 1000 a day in profit (believe me I have made considerable more on many occasions). Especially in stocks that are fairly stable like CSCO and INTC.

IMO, MA's don't hold a candle to DMI, not even close. I suggest you try it as I explained in my last post. After that you can come to your own conclusions about what works. I already know it works for me.
 

Trader333

Moderator
8,606 932
bigtimetrader,

How much do you pay in commission (full round trip) for each trade of say 3000 shares ?

Which broker do you use ?


Paul
 

bigtimetrader

Junior member
47 2
I pay $7.95 + ECN fees through www.Realfasttrader.com
Using ISLD trade that 3000 share trade would be $7.95 + 6 (ecn fee) = $13.95 on each side.
 

neil

Legendary member
5,167 747
bigtimetrader said:
I pay $7.95 + ECN fees through www.Realfasttrader.com
Using ISLD trade that 3000 share trade would be $7.95 + 6 (ecn fee) = $13.95 on each side.


How does that compare to Interactive Brokers?
 

bigtimetrader

Junior member
47 2
neil said:
How does that compare to Interactive Brokers?

I have used IB (Interactive) in the past. IB has horrible customer service (often you will wait on hold 5-10 minutes and then getting a rude jerk when you get through) and I never particularly liked IB's software either.

Probably slightly more commission (maybe $1 each side) at Realfasttrader. Howver, customer service is good probably because they are actually traders themselves so they understand your problem. Plus the software is the only one that makes DMI indicator so easy to use and thats how I make my money. It's worth a slightly more for good support and software (IMO).
 

Trader333

Moderator
8,606 932
A few people have complained about IB being poor on customer support but I have not found that to be the case although I know many people dont like the TWS interface. Can I ask how long ago you last used IB ?

IB costs to trade 3000 would be more than the above at $17.50 per side (or $35 in total) which means that Realfasttrader are highly competitive in comparison and for this type of trading low transaction costs are essential


Paul
 

bigtimetrader

Junior member
47 2
I last used IB around 2 years ago. The experience was so bad I would never use them again. (I've also used several others brokers including cybertrader and mbtrading)

RFT (Realfasttrader.com) has worked well for me for about 2 years now. I am ok with the commission, but I really like their DAS PRO software because of the DMI charting. I have done very good in my trading since switching to RFT.
 

mark_m

Junior member
38 1
Hi Big Time,

What length are you using on ADX/DMI etc. on 1 min.? Also - have you ever looked at this on NQ,ES etc?
 

bigtimetrader

Junior member
47 2
Just to clarify the ADX line in the DAS PRO software is actually just a DX line, which is apparently slightly different (not exactly sure how, I am not a technical expert). I do not trade futures although I do use a Nasdaq futures chart as a leading indicator to help me with exit points.

I use 2 intraday charts with DMI a 1minute and a 2 minute. The 1 minute makes the initial call & the 2 minute confirms it. Some people that I know use a 3 minute to confirm instead of a 2 minute.
 

Trader333

Moderator
8,606 932
What time length are the indicators set to ? I believe that the default is 14 but you may have it set at a different length.


Paul
 

bigtimetrader

Junior member
47 2
I am using a 15 smooth period currently. Although I have at different times had it set anywhere from 12 to 15.

PS: DMI made a few nice calls in CSCO today, from .05 - .10 (plus several smaller moves).
 

Trader333

Moderator
8,606 932
I have been looking at the DMI is Tradestation 2000i and it is setup the same as you have described in DAS PRO so includes the ADX. I will have a look at it during the next week. Do you also use Level II ?


Paul
 
 
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