Direct Answer
Plus Directional Indicator is a trend measure used to describe trend direction, persistence, strength, or a smoothed price reference. The production page must define the exact calculation convention before interpreting higher or lower readings, because platform and provider implementations can differ.
Plus Directional Indicator: Formula, Meaning, Signals, Examples and How to Use It
How Is Plus Directional Indicator Calculated?
Wilder's +DI measures upward directional movement as a share of average true range. It rises when highs are extended upward faster than lows are extended downward.
Formula: +DI = 100 * Smoothed(+DM, n) / ATR(n), where +DM = High - prior High when that upward move exceeds the downward move and is above 0
Inputs:
- High, low and close prices
- Smoothing period n (14 is Wilder's default)
- Smoothed plus directional movement
- Average true range
Worked example. A smoothed plus directional movement of 2.1 over an ATR of 5.0 gives a +DI of 42.0%. The inputs are illustrative numbers, not market data.
Reading it. A higher +DI means upward movement is a larger share of the true range. It is usually compared with -DI: +DI above -DI indicates upward movement dominates. Strength of the trend is judged with ADX.
Limits. The +DI and -DI lines cross frequently in sideways markets, producing false signals. It describes directional dominance only and not whether a trend will continue.
Indicator overview
| Attribute | Value |
|---|---|
| Category | Trend |
| Asset classes | Stocks, ETFs, Indexes, Futures, Forex, Crypto, Commodities |
| Output type | Line/scalar |
| Parameters | Varies by implementation; document exact settings on use |
What is Plus Directional Indicator?
Plus Directional Indicator is a trend measure used to describe trend direction, persistence, strength, or a smoothed price reference. The production page must define the exact calculation convention before interpreting higher or lower readings, because platform and provider implementations can differ.
For Swoopr, the canonical profile separates definition, calculation, interpretation and decision use. That keeps readers from collapsing a descriptive metric into a trading strategy. An indicator can describe trend, momentum, volatility, participation, positioning or risk without providing a complete entry, exit, sizing or portfolio decision.
What does it measure?
Plus Directional Indicator measures specific market properties in the Trend domain. The practical value is repeatability: the same inputs and formula can be applied across a defined dataset, allowing users to compare readings through time or across instruments when the calculation convention is held constant.
How to read Plus Directional Indicator
Interpretation depends on the market property being measured. A descriptive reading is not automatically predictive. The same numerical state can lead to different outcomes in a strong trend, quiet range, event-driven gap or illiquid market. Always combine with context from price structure, volume, and broader market regime before drawing conclusions.
Strengths
- It reports only upward directional pressure, so one line answers how strongly highs are being extended.
- The ATR denominator turns an absolute extension into a share of typical range, so values are not tied to the price level.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- Wilder smoothing carries a burst of upward movement forward, so the line decays slowly after the move has ended.
- A rising +DI with a flat -DI and one with a falling -DI look different on a chart but are not told apart by +DI alone.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance. Where multiple valid definitions exist, Swoopr states the alternatives and the reason for selecting its primary convention.
Frequently Asked Questions
Is Plus Directional Indicator a buy or sell signal?
No. A higher +DI means upward movement is a larger share of the true range. The +DI and -DI lines cross frequently in sideways markets, producing false signals. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for Plus Directional Indicator?
Plus Directional Indicator takes these inputs: high, low and close prices; smoothing period n (14 is Wilder's default); smoothed plus directional movement. There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner.
Can Plus Directional Indicator be used by itself?
The +DI and -DI lines cross frequently in sideways markets, producing false signals. It describes directional dominance only and not whether a trend will continue. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does Plus Directional Indicator work on every timeframe?
The calculation (+DI = 100 * Smoothed(+DM, n) / ATR(n), where +DM = High - prior High when that upward move exceeds the downward move and is above 0) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does Plus Directional Indicator give false signals?
Wilder smoothing carries a burst of upward movement forward, so the line decays slowly after the move has ended. A rising +DI with a flat -DI and one with a falling -DI look different on a chart but are not told apart by +DI alone. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should Plus Directional Indicator be backtested?
Rebuild Plus Directional Indicator from high, low and close prices using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.