When learning about forex trading, you may have come across the term +DI (Positive Directional Indicator) and wondered what it means. 

Is it just another technical term, or can it actually help you trade better?

In this article, we will thoroughly explain everything so that you can grasp the concept. 

You’ll learn what +DI is, how it works, and how traders use it to identify strong market trends.

By the end, you’ll not only understand +DI but also know how to apply it in real trading situations to make smarter and more confident decisions. 

Whether you are a beginner or someone looking to improve your trading strategy, this guide will give you practical insights into using +DI effectively.

What is +DI (Positive Directional Indicator)

+DI stands for Positive Directional Indicator, and it is part of the Directional Movement Index (DMI), a technical indicator developed by J. Welles Wilder Jr.

This indicator helps traders determine the strength of a trend by analyzing price movement.

+DI measures how strongly the price moves up over a given period. If +DI is high, the price is trending upward. 

If it is low, the price is not trending strongly upward. This helps traders decide whether they should buy or avoid a trade.

The Formula for +DI

To calculate +DI, follow these steps:

Find the Current High and Previous High

If today’s high is higher than yesterday’s high, calculate the difference. This is called +DM (Positive Directional Movement).

If today’s high is lower than yesterday’s high, set +DM to zero.

Find the True Range (TR)

TR is the largest value among:

Today’s high minus today’s low.

Today’s high minus yesterday’s close.

• Today’s low minus yesterday’s close.

Calculate +DI

+DI = (Smoothed +DM / Smoothed TR) x 100

This value is plotted on a chart to help traders analyze trends.

Example of +DI

If you are trading EUR/USD. You check the +DI indicator:

• If +DI is rising, it means the price is increasing, and buyers are in control.
• If +DI is falling, buyers are losing strength, and the trend may reverse.
• If +DI is above -DI (Negative Directional Indicator), an uptrend is strong.
• If -DI is above +DI, a downtrend is strong.

Let’s say the +DI is at 30, and the -DI is at 15. This means the uptrend is twice as strong as the downtrend, signaling a potential buy opportunity.

How to Use +DI in Forex Trading

1. Confirm an Uptrend

When +DI is higher than -DI, traders look for buying opportunities. The larger the gap between +DI and -DI, the stronger the trend.

2. Entry and Exit Points

When +DI crosses above -DI, it may be a signal to buy.

When +DI crosses below -DI, it may be a signal to sell.

3. Combine with Other Indicators

ADX (Average Directional Index): Helps confirm if the trend is strong.

Moving Averages: Helps smooth out price action for better clarity.

RSI (Relative Strength Index): Shows if the market is overbought or oversold.

Pros and Cons of Using +DI

Pros

• Helps identify strong uptrends.
• Works well with other indicators like ADX.
• Helps traders find potential entry and exit points.
• Useful for both beginners and experienced traders.

Cons

• Can give false signals in sideways markets.
• Requires confirmation with other indicators.
• May lag behind price action.

What Does a DI Value Indicate?

A Directional Indicator (DI) value indicates the strength of a trend in the market. It is part of the Directional Movement Index (DMI), which helps traders determine whether a trend is strong or weak.

A high +DI value means strong upward movement (buying pressure).

A high -DI value means strong downward movement (selling pressure).

When +DI is above -DI, it suggests an uptrend.

When -DI is above +DI, it suggests a downtrend.

What Does It Mean When DI is Positive?

When +DI is positive and rising, it means that buyers are in control and the price is moving upward. This suggests a bullish trend and potential buying opportunities.

However, traders should confirm the trend strength using other indicators like ADX (Average Directional Index) before making a trading decision.

How to Use the ADX Indicator for Day Trading

The ADX (Average Directional Index) is used in day trading to measure trend strength and help traders decide when to enter or exit a trade. Below is how to use it:

1. Understand the ADX Values

Above 25 = Strong trend (good for trading).

Below 20 = Weak trend (avoid trading).

Above 50 = Very strong trend (high volatility).

2. Use ADX with +DI and -DI

When +DI is above -DI and ADX is above 25, it confirms a strong uptrend → Buy Signal.

When -DI is above +DI and ADX is above 25, it confirms a strong downtrend → Sell Signal.

When ADX is below 20, it signals a weak trend → Avoid trading or wait for a breakout.

3. Look for Crossovers

If +DI crosses above -DI and ADX are rising: Uptrend confirmation (buy opportunity).

If -DI crosses above +DI and ADX is rising: Downtrend confirmation (sell opportunity).

4. Set Stop-Loss and Take Profit

Place a stop-loss below the previous swing low in an uptrend or above the swing high in a downtrend.

Use ADX to ride the trend and exit when it starts declining below 25.

Let’s say you’re trading EUR/USD on a 15-minute chart:

+DI is at 30, -DI is at 15, and ADX is at 28 – Strong uptrend – Buy Signal.
Later, -DI rises above +DI and ADX starts falling – Trend weakening – Time to exit.

FAQs

What is the difference between +DI and -DI?

• +DI measures upward price movement, while -DI measures downward price movement. Comparing the two helps traders determine the trend direction.

Can I use +DI alone to trade forex?

• No. It is best to use +DI with other indicators like ADX, RSI, or moving averages for better accuracy.

How do I know when to enter a trade using +DI?

• When +DI crosses above -DI, it signals a possible buy opportunity. When +DI crosses below -DI, it signals a possible sell opportunity.

Does +DI work in all market conditions?

• No. It works best in trending markets but can give false signals in sideways markets (when the price moves in a narrow range).

Conclusion

+DI (Positive Directional Indicator) is a powerful tool that helps traders spot strong uptrends in forex trading. 

When used correctly with other indicators, it can improve trading decisions. 

Remember, no indicator is 100% perfect, so always confirm signals before making a trade.