Minus Directional Movement (MINUS_DM)

MINUS_DM measures downward price movement by calculating the difference between consecutive lows, smoothed over a specified period (default 14). When the current bar's low is lower than the previous low by a certain amount, and this movement exceeds the upward movement, MINUS_DM records this directional pressure. It's a raw component of the Directional Movement System developed by J. Welles Wilder. MINUS_DM is used alongside PLUS_DM to calculate the Directional Indicators (DI+ and DI-) and ultimately ADX. Higher MINUS_DM values indicate stronger downward directional pressure.

Technical analysts use MINUS_DM primarily as a building block for calculating MINUS_DI and ADX rather than trading it directly. However, comparing MINUS_DM to PLUS_DM reveals raw directional pressure - when MINUS_DM > PLUS_DM, downward movement dominates. MINUS_DM is essential for understanding how ADX and DI indicators derive their values. It's used by algorithm developers building custom directional indicators or by advanced traders creating weighted directional systems. Rarely traded alone, it's typically combined with PLUS_DM, ADX, and DI indicators for comprehensive trend analysis.