DMI stochastic extreme – indicator for MetaTrader 5
A variation of DMI stochastic extreme.
The original usage (by Barbara Star) is as she describes :
DMI stochastic uses the basic formulation for a 10, 3, 3 stochastic
oscillator found in most charting packages but replaces the closing
price of the price bar with the value of the 10-period DMI oscillator.
The overbought and oversold levels are different also. They occur at the
10 and 90 levels instead of the more usual 20 and 80 levels. The DMI
stochastic is much faster and less smooth than a stochastic based on
price. However, it reaches extremes quickly, which allows for timely
entries and exits.
Defaults used are not the defaults used by Barbara Star, but you can set the parameters (including the levels) to the desire values.
This version of indicator deviates in the way how DMI can be calculated. The original DMI uses what is sometimes referred to as “Wilders EMA” – which is exactly the same as what metatrader users are used to as SMMA. So, if you use SMMA for DMI calculation, you are going to get the original DMI, but the indicator allows you to experiment and to change that completely, that way getting new versions of DMI. Coupled with multi time framing, choice of color changes and alerts that are alerting according to the choice of color changes, it can be used for quick reversals seeking or for long trend identifying. As usual, it mostly depends on the settings, but it seems to be useful tool for trading arsenal.