Developed by Tushar Chande and Stanley Kroll, the Dynamic Momentum Index is quite similiar to Welles Wilder's Relative Strength Index. The differnce is the DMI uses variable time periods (from 3 to 30) vs. the RSI's fixed periods.

The variability of the time periods used in the DMI is controlled by the recent volatility of prices. The more volatile the prices, the more sensitive the DMI is to price changes. During quiet market conditions the DMI will use more time periods while less are used during more active markets. As a result, the DMI is more sensitive to fluctuations in the market and displays changes more rapidly than the RSI can.

Much like the RSI, Chande recommends using the DMI much the same as the RSI, with bearish conditions appearing at 70 or above and bullish conditions below 30. Remember, as the DMI is more sensitive to market dynamics, it often leads the RSI into overbought / oversold territories by one or two days.