D-Disparity Dots Indicator

Creator :Definedge

The Disparity Index introduced by Steve Nisson measures the distance between the latest closing price of a security and the moving average. The disparity index value is presented as a percentage. When the disparity index exceeds the zero line, it means that the price of the scrip has closed above the moving average. The disparity index is below the zero line if the price of the stock has closed below the moving average.

An increasing disparity is bullish because it indicates a strong price trend. Similarly, a falling disparity line indicates a bearish trend.

A higher disparity reading indicates that the bulls have exhausted themselves, whereas a lower disparity reading indicates that the bears have exhausted themselves.

Disparity dots assist in identifying when an indicator is trending higher or lower over a specified period. When the indicator is trending upward, red dots appear, indicating that the bullish trend may be about to exhaust itself. There are green dots when the indicator is trading at lower levels, which indicates that the bearish trend may be coming to an end.

However, price confirmation is critical when trading reversals based on D-disparity dots.

Click here to know more about disparity index. It is explained in detail in this video.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.