Minus Directional Indicator (14)

The Minus Directional Indicator (14) is a trend indicators indicator used in Skyrexio Strategy Builder for trend strength measurement and direction identification.

Introduction

The Minus Directional Indicator (-DI) is a bearish trend strength indicator that measures the strength of downward price movement. -DI is primarily bearish - it provides SHORT signals when values are high and rising, indicating strong downward momentum. This indicator is essential for confirming bearish trends and measuring the conviction behind downward price movements.

How Minus Directional Indicator (14) Works

-DI was developed by J. Welles Wilder Jr. as part of the Directional Movement System. It measures the strength of downward price movement by analyzing negative directional movement relative to the Average True Range (ATR). The calculation involves smoothing negative directional movement over 14 periods and dividing by ATR to create a normalized measure of bearish momentum.

Key characteristics of -DI:

• Bearish momentum measurement - Quantifies the strength of downward price movement • Relative strength indicator - Compares negative directional movement to volatility • Trending vs ranging identification - High -DI values indicate strong downward trends • Directional bias confirmation - When -DI > +DI, bearish bias is confirmed • Momentum acceleration detection - Rising -DI indicates strengthening bearish momentum

Market Psychology: -DI reflects the market's bearish conviction and downward momentum. High -DI values indicate strong selling pressure and sustained downward movement. When -DI is greater than +DI, it shows bears are in control and downward momentum is dominant.

Key Characteristics

Attribute	Details
Category	Trend Indicators
Type	Bearish Trend Strength Measurement
Primary Use	SHORT entries and bearish trend confirmation
Timeframe	All timeframes supported (1m to 1M)
Confirmation	ADX, volume, momentum indicators

Strategy Applications

🔴 SHORT STRATEGY (Primary Use)

-DI is primarily a SHORT signal indicator. Use SHORT entries when -DI is high and rising, especially when -DI > +DI, indicating strong bearish momentum and downward trend strength.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Plus Directional Indicator (14)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: -DI rising (strengthening bearish momentum)
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Additional Entry 2: Strong bearish momentum with trend confirmation
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 25

AND

First Condition: Average Directional Index (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 25

Take Profit Orders (SHORT)

Rule 1: Exit condition - Bearish momentum weakening
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Cross Below
Second Condition: Plus Directional Indicator (14)
Timeframe: 1H

OR

Rule 2: Exit condition - -DI falling below threshold
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 20

OR

Rule 3: Exit condition - Oversold with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

AND

First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Bullish momentum dominance
First Condition: Plus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Minus Directional Indicator (14)
Timeframe: 1H

AND

First Condition: Average Directional Index (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 20

OR

Rule 2: Stop loss - -DI collapse
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 15

OR

Rule 3: Stop loss - Volume confirms breakout
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Volume Weighted Moving Average
Timeframe: 1H

AND

First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Plus Directional Indicator (14)
Timeframe: 1H

🟢 LONG STRATEGY (Secondary Use)

-DI is not naturally suited for LONG strategies as it measures bearish momentum. Use LONG entries only when -DI is very low, indicating weak bearish momentum, and combine with strong bullish confirmations.

Base Entry Order (LONG) - Weak bearish momentum

Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 15

AND

First Condition: Plus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 25

Additional Entry Orders (LONG) - Not recommended

Additional entries not recommended for LONG strategy using -DI. Use bullish indicators like:

• Plus Directional Indicator (14)

• RSI oversold

• MACD bullish crossover

Take Profit Orders (LONG) - Exit existing positions

Rule 1: Exit condition - Bearish momentum returning
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Cross Above
Second Condition: Plus Directional Indicator (14)
Timeframe: 1H

OR

Rule 2: Exit condition - -DI rising above threshold
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 20

OR

Rule 3: Exit condition - Overbought reversal potential
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

Stop Loss Orders (LONG) - Protect existing positions

Rule 1: Stop loss - Strong bearish momentum confirmed
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Plus Directional Indicator (14)
Timeframe: 1H

AND

First Condition: Average Directional Index (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 25

OR

Rule 2: Stop loss - -DI breakout above resistance
First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 30

OR

Rule 3: Stop loss - Volume confirms bearish momentum
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Volume Weighted Moving Average
Timeframe: 1H

AND

First Condition: Minus Directional Indicator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe -DI Analysis

Setup

Higher Timeframe Confirmation:

• Daily: -DI > +DI (bearish bias established)

• 4H: -DI rising + ADX > 25 (strong bearish momentum)

• 1H: -DI execution signals + volume confirmation

Execution

SHORT: Daily/4H -DI dominance + 1H -DI crossover above +DI Scaling: -DI rising with ADX expansion Exit: -DI falling below +DI or extreme oversold

-DI Momentum Breakdown Strategy

Setup Process:

1. Identify -DI crossing above +DI (bearish momentum shift)

2. Confirm with ADX > 25 (strong trending conditions)

3. Wait for volume confirmation of breakdown

4. Enter on pullback or momentum continuation

Execution:

• Base Order: -DI > +DI + ADX confirmation

• Additional: -DI rising above moving average

• Take Profit: -DI momentum divergence or extreme readings

• Stop Loss: -DI falls below +DI with trend strength

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
SHORT Strategy	Standard	-DI > +DI with ADX > 25
LONG Strategy	Reduced (25-50%)	-DI very low, use bullish confirmations
High -DI	Increase confidence	-DI > 30 shows very strong bearish momentum
Low -DI	Reduce size	-DI < 15 indicates weak bearish momentum

-DI Reliability Factors

High Reliability

✅ -DI clearly above +DI ✅ -DI rising with ADX > 25 ✅ Volume confirms bearish momentum ✅ Multi-timeframe -DI alignment

Low Reliability

❌ -DI close to +DI (unclear dominance) ❌ -DI falling despite being above +DI ❌ Low ADX (ranging conditions) ❌ Conflicting momentum indicators

Best Practices

For SHORT Strategies

1. Wait for -DI > +DI - Confirm bearish momentum dominance before entering

2. Rising -DI preferred - Enter when -DI is increasing (strengthening momentum)

3. ADX confirmation - Combine with ADX > 25 for trending conditions

4. Volume validation - Ensure bearish moves are supported by volume

For LONG Strategies

1. Very low -DI only - Only consider LONG when -DI < 15 (very weak bearish momentum)

2. Strong bullish confirmation - Require multiple bullish indicators for LONG entries

3. Quick exits - Take profits fast when -DI shows any bearish recovery

4. Tight stops - Use very close stops due to counter-trend nature

Common Mistakes to Avoid

• Ignoring +DI - Using -DI without comparing to +DI for directional bias

• Fighting strong -DI - Going LONG when -DI shows strong bearish momentum

• No ADX confirmation - Trading -DI signals without trend strength confirmation

• Volume neglect - Ignoring volume confirmation for -DI signals

Market Conditions Analysis

Market Type	SHORT Strategy Effectiveness	LONG Strategy Effectiveness
Strong Downtrend	🟢 High (-DI > +DI, rising)	🔴 Very Low (against momentum)
Weak Downtrend	🟡 Medium (-DI > +DI, flat)	🟡 Medium (if -DI very low)
Ranging	🟡 Medium (-DI/+DI oscillating)	🟡 Medium (mean reversion)
Uptrend	🔴 Low (-DI < +DI)	🟢 High (weak -DI confirms bulls)
High Volatility	🟡 Medium (confirm with volume)	🟡 Medium (higher risk)

Related Indicators

Indicator	Relationship	Link
Plus Directional Indicator	Opposite bullish measurement	Plus Directional Indicator (14)
Average Directional Index	Trend strength confirmation	Average Directional Index (14)
Directional Index	Raw directional calculation	Directional Index (14)
ADXR	Smoothed trend strength	Average Directional Index Rating (14)

Conclusion

-DI is a bearish momentum indicator that excels at measuring the strength of downward price movement. Its primary value lies in confirming bearish trends and providing SHORT entry signals when combined with proper confirmations.

Key Takeaways

• PRIMARY USE: SHORT entries when -DI > +DI (bearish momentum dominance)

• SECONDARY USE: Bearish momentum confirmation and trend strength measurement

• ALWAYS: Compare -DI to +DI for directional bias and confirm with ADX

• REMEMBER: -DI measures bearish momentum - use bullish indicators for LONG strategies

Success with -DI requires understanding its bearish nature and using it primarily for SHORT strategies. Always compare -DI to +DI for directional bias and confirm with ADX for trend strength before entering positions.

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