How to Use the Directional Movement Index

The Directional Movement Index is one of Welles Wilder’s lesser-known creations, but it is explained in his book “New Concepts in Technical Trading Systems” published in 1978. Many of the most common indicators in use today originate in this seminal book on technical trading. The ADX, RSI, Average True Range, the Parabolic SAR, and the Directional Movement Index all come from the same volume. If you have not read this book yet, it should be on your required reading list as it is truly one of the classics in trading.

The Directional Movement Index (DMI) is a momentum indicator. It calculates the strength of the upward movement or downward moment and shows the results as a trend strength line, also called the ADX. But for the purpose of this article, we will exclude analyzing the ADX and speak strictly of the DMI. The indicator is recognizable by two distinct lines called the +DI and the -DI.

The + DI measures the upward pressure, or upward movement or buying pressure (take your pick of which term you prefer) and the -DI measures the negative or downward movement, or selling pressure. When the two lines cross it can be a buying signal if the + DI crosses over the -DI, and conversely if the -D1 crosses over the + DI is considered a selling signal. Wilder also theorized that when a crossover takes place, it can be seen as a trend reversal.

My experience with the DMI, which is extensive, would suggest that the crossover points are not necessarily indicative of trend reversals. On the contrary, depending too heavily upon the DMI can cause you to be whipsawed in tightly congested markets. So I discount Welles Wilder’s theory on crossing points being indicative of trend reversals.

In non-trending markets the DMI can be confusing and cause many false buy/sell signals. For that reason, I do not use the DMI in consolidating or congested markets. However, in trending markets the DMI can be quite useful in identifying potential retracements, and when combined with Fibonacci retracements, can allow you to obtain a few extra points playing the retracements in a broader trend.

To Welles Wilder’s credit, he was aware of the whipsawing tendencies of the DMI and places a limitation upon its use. Wilder thought that you should not initiate a long position until price has taken out the high posted on the day or the bar that the+ DMI crosses above them. This caveat does tend to lessen the number of spurious crossovers the DMI can display, but I’m still not comfortable using the DMI as a primary indicator in my futures trading.

On the other hand, the DMI is a great backup indicator, especially since it is momentum-based, to filter trades off of your primary indicator. This is the exact role I have implemented to use the DMI and have been pleased with the results.

In summary, the DMI is not an optimal primary buy/sell indicator because of the false and/or spurious buy/sell indicators it routinely indicates. But it can be very valuable as a filter indicator to back up the validity of your primary indicator and ultimate trading decisions. Finally, I have used the DMI in trending markets to identify retracements with great success and it truly shines in this capacity.

Advertorials And Press Releases To Market Your Business

What does your marketing plan consist of? Is your plan the same business plan that you showed to investors? Or is your plan solely consisted of marketing techniques and ways to get new people into your business? I don’t know about you, but the marketing plan that I would have is the second one.

Having a business plan is fine, but when it comes down to getting more new customers in the door, this is where your marketing plan should come into play. Does this seem strange to you? If so, then you should put it into practice in your business just to see which plan works best.

I’m assuming that you’re reading this article because you want to know some ways to drum up new customers into your business. And if this is correct, then I would like to say congratulations! You’re one of a few business owners who truly want to see their marketing plans work for you.

Well in today’s article, we’re going to talk about some ways that you can start getting more new customers and clients into your place of business. In fact, here’s the first strategy for doing so:

1) Advertorials

I like advertorials because they can really make your business look credible. An advertorial is simply an ad that looks like an article. You will want to include your contact information at the bottom of the ad, but be sure to make it look like an endorsed piece.

To write a good advertorial, you will want to learn how to write in 3rd person. Don’t try to sound newsworthy half way through the ad, and then start to pitch your services for the latter half. This isn’t a good way to run the advertorial. Make sure it blends in with the style and ton of the publication or newsletter that you’re running it in. This is a great way to convince customers that your advertorial is something that is unique.

Here’s another tip for getting more new customers in your place of business.

2) Press releases

This kind of goes hand in hand with the first tip above. There are a lot of press release services on the internet where you can list your press release at. One of my favorite press release sites is Prweb.com. But if you’re not into the internet marketing side of things, maybe you should consider running your press release offline.

To make a good press release, it has to be something that is truly newsworthy. So brainstorm on some ideas of things that have been going on in your business. Did you reach a new high in sales? Were you rated the best business owner (in your niche) for the year? Are you joining forces with another business owner in your city? In what ways can you come up with newsworthy material?

This is very important because if it isn’t substantial and isn’t enough to get full media attention, then the press release probably won’t work for you.

No matter which option you choose, know that both of them can really increase your sales and profits immediately. I hope you use these tips to have the kind of success that you dream of.

Good luck with using these tips to have success in your business.

Marketing: The Cats & Dogs Of It

For some time I’ve struggled to come up with a way of distinguishing direct from indirect marketing, if only to help participants in my seminars.

Typically, we think of indirect marketing as all of those activities that create customer awareness, fuzzy feelings, and a positive predisposition to buy, which culminates in a customer deciding to contact us.

Direct marketing is when we send them a mailer or call them on the phone or run an ad on radio or TV, beckoning them to come into our stores or to call our “800″ numbers.

With indirect, they come to us, and with direct, we go to them.

I had just finished admonishing my dog to stay back while I parked in the driveway, and he obeyed, dutifully. Then I went indoors, cooked some salmon, and one of the cats I feed meowed that she wanted to come in for a bite and back-scratching.

Then, it hit me.

Direct marketing is like dog training. You have to issue commands, repeatedly, to get them to learn what you want, and to then respond. But once you have the drill down, they tend to keep complying as long as the stimulus and the reward remain the same.

Indirect marketing is like befriending a cat. You can’t be too direct, or you scare them off. You make it comfortable for them to get to know you, and then, if you’re lucky, you might earn the chance to feed them for the rest of their lives, getting in return, a most gratifying morsel of affection.

Dog training is reliable. You can do it in a park, in a pack arrangement with other clueless owners. It’s called Obedience School.

Cats? Well, obedience just isn’t in their vocabularies.

There are satisfactions in both arrangements. My Bearded Collie, a rescue dog, is a slobbering fuzz ball who loves to dig and jump on me. Cleopa, a former member of a feral cat colony, and occasional recidivist, is unusually affectionate and has a huge vocabulary, considering. But she might not say hello for a day or two.

Take your pick, or if you’re like me, enjoy both.

But don’t expect indirect marketing to carry your newspaper. It just isn’t that compliant.