The Directional Movement Index (also known as DMI) is a momentum indicator developed by J. Welles Wilder. The DMI is actually part of a series of technical indicators developed by Wilder, so some trading platforms split up the indicators, providing Directional Movement as one indicator and ADX as another. DMI tells you when to be long or short. It is especially useful for trend trading strategies because it differentiates between strong and weak trends, allowing the trader to enter only the strongest trends.

Originally developed by Chester Keltner in the late 1950’s, the Keltner channel indicator belongs to a family of Technical analysis tools called envelop indicators. Keltner Channels are volatility-based envelopes set above and below an exponential moving average. This indicator is similar to Bollinger Bands, which use the standard deviation to set the bands.

A Simple Moving Average (SMA) is an arithmetic moving average calculated by adding the closing price of the security for a number of time periods and then, dividing this total by the number of time periods. SMA is basically an average stock price over a period of time.