Dynamic Momentum Index

Dynamic Momentum Index is an RSI whose lookback is re-derived on every bar. The Library's first build of the Dynamic Momentum Index divides the base period by a volatility index and reads a standard Wilder RSI at that adaptive length, exactly as Chande and Kroll specified: above-normal volatility contracts the effective period toward the minimum, quiet markets stretch it toward the maximum. A dashboard reports the current effective length and volatility index, and an optional stepline plots the length so the adaptation stays visible.

How to Trade the Dynamic Momentum Index?

• Overbought / oversold: readings beyond 70/30 carry the usual RSI conventions, with alerts on entering and exiting each zone; extremes arrive earlier because the period contracts in fast markets.
• Centerline regime: the 50 line splits bullish from bearish momentum — the plot is colored and gradient-filled by side, and both crossings carry alerts.
• Effective length as context: a short reading means signals come from a twitchy, fast oscillator; a long one means the market is quiet and readings are steadier.

Dynamic Momentum Index Settings

• Source (default close): series for both the volatility index and the RSI.
• Base RSI Length (default 14): the period being adapted, divided by the volatility index each bar.
• Volatility Stdev Length (default 5) and Volatility Average Length (default 10): the deviation window and its comparison average.
• Minimum RSI Length (default 5) and Maximum RSI Length (default 30): the clamps on the dynamic lookback.
• Overbought Level (default 70) and Oversold Level (default 30): the zone thresholds.
• Dashboard and style toggles: panel location and size, colors, and the effective-length stepline (disabled by default).

Frequently Asked Questions

Is this Wilder's DMI from the ADX system?

No — the shared acronym is a trap. Wilder's directional movement index measures trend direction and strength; this is Chande and Kroll's adaptive-length momentum oscillator, read like an RSI, not like ADX.

How does it differ from a standard RSI?

A fixed 14-period Relative Strength Index treats every regime identically, lagging in fast markets and overreacting in quiet ones. The DMI re-derives its period from current volatility, changing when extremes and centerline crosses arrive rather than what they mean.

Should I widen the 70/30 levels?

Because the lookback compresses in volatile phases, the DMI visits its extremes more often than a fixed RSI, and some users widen the thresholds to 80/20 to compensate. Start from the defaults and adjust to the market's volatility profile.