March 10, 2020

# What is the DMI Stochastic Extreme?

The DMI Stochastic Extreme is a technical indicator that applies stochastic calculation algorithm to values of DMI Oscillator.  We use this in conjuction with the PolarizedFractalEfficiency (PFE) indicator.

Two values are found on the specified period: hh and ll, the former being the highest DMI Oscillator value and the latter being the lowest. The Stoch plot is calculated as the percent ratio between two sums: sum of (osc – ll) values and that of (hh – ll) values, both sums found on the “sum length” period. DMI Stochastic Extreme study finds crossovers of the Stoch plot with Overbought and Oversold levels and marks them with arrows.

According to Barbara Star’s article “The DMI Stochastic”, not each arrow should be interpreted as a Buy or Sell signal; the author suggests using them along with DMI Oscillator instead. When the DMI Oscillator is positive, up arrows might suggest a Buy signal; when the DMI oscillator is negative, down arrow might be considered a Sell signal.

***Souce:  ThinkOrSwim

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## Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

May 8, 2024

## What Is Delta In Options Trading?

Understanding the Delta of an option is crucial for both new and seasoned traders. It’s one of five specific calculations called “Greeks,” which help measure specific factors that could influence the price of an options contract. Delta is a metric that helps you gauge how much the value of an option contract is expected to […]

March 28, 2024

## Wait! There Is An Options Greek Called Rho?

Out of all the Greeks in options trading, Rho is capable of providing uniquely critical insights that others cannot offer. Rho measures an option contract’s susceptibility to changing interest rates. We’ll explain how Rho by defining its specific functions, how interest rates impact options trading, and cover some pertinent scenarios. What is Rho in Options […]

March 25, 2024

## You Have A Lot Of Options Out There

There are a number of different types of options expiration types.  In the vast majority of our signals, our options will be categorized as “American”-style options.  There are some, like VIX options, that are “European”-style options.  Here’s a quick explanation of both. The term “American style” in relation to options has nothing to do with […]

May 8, 2024

## What Is Delta In Options Trading?

Understanding the Delta of an option is crucial for both new and seasoned traders. It’s one of five specific calculations called “Greeks,” which help measure specific factors that could influence the price of an options contract. Delta is a metric that helps you gauge how much the value of an option contract is expected to […]

March 28, 2024

## Wait! There Is An Options Greek Called Rho?

Out of all the Greeks in options trading, Rho is capable of providing uniquely critical insights that others cannot offer. Rho measures an option contract’s susceptibility to changing interest rates. We’ll explain how Rho by defining its specific functions, how interest rates impact options trading, and cover some pertinent scenarios. What is Rho in Options […]