PDI by Precision Trading Systems
Following numerous requests to produce a new product I have finally done so, it has been a "work in progress project" for several years until its recent completion to my satisfaction. I am very pleased with it as it does the intended job while being very simple to use.
The concept and the PDI solution to the problem of finding tops.
The problem traders share is the difficult challenge of finding market tops. I believe this product goes a long way to solving this issue.
One of the keys to using it correctly is nothing more complicated than getting the length and core length correct to test the historical observations and then noting what worked previously.
One is encouraged to experiement with very different lengths and core lengths to see what emerges from the testing. I have had good results when using two plots of wildly different lengths and then looking for confluences.
As my customers know my products have to be good or I don't release them, what I like about PDI is it does a better job than most indicators of finding generally nice selling spots...enjoy.
Precision Decision Index for NinjaTrader was designed by Roger Medcalf of Precision Trading Systems from when time begain until 2023
Yes I know it took a while, but some things just need to be done carefully.
The triggers are issued on returning down or up from the user configurable extreme points
Chart below is a 2 hour chart of USDJPY . First of all when plotting PDI to the charts is to tune it to your data. There is no "default best setting" as the best setting for you will differ depending on market, timeframe and chart type. Some nice selling areas are clearly flagged up by PDI as well as the identification of a the major lows.
Different periods of length and core lengths are use below. Much slower
Gold futures contract 10 minutes below we see two bread and butter patterns and a very good indication of a nice low. It is defined as very good because of the number of bars that it occupies. The highlights at the low only last for 5 bars until bouncing up again, this is what we want to see as it illustrates strong rejection at this level. (The buyers just cant get enough so it flies up again as its seen as such a bargain to them) The slow curved top pattern is less reliable and this type of activity is best treated as a warning sign rather than a definitie selling spot.
Germany Dax 40 futures demonstrating nice cycling and oscillating behaviour suiting PDI very well.
The last trigger on the extreme right is the clearest as its just a few bars in the highlighted area. Dax futures trading know very well how joyful it feels when experiencing the drastic "order book collapse". It also lines up nicely with a minus development level to confirm it.
This indicator is simple to use and just as suited for beginners, intermediates and experts. Those who enjoy experimentation will soon see its benefits when they make adjustments to the parameters to tune it into the sync of their favourite market.
Cisco 4 minute chart is another nice example of cycling price action synchronized to the best lengths
Again we see the extreme right example being the clearest and cleanest with just a single bar being highlighted, this is followed by a violent rejection of the price level, which flies up very fast from it. Notice the round number syndrome is in play, together with a failed downward break. So we have triple confirmation to enter long here.The round number syndrome "phenomenon" is simply described as the level people want to buy at. On leaving orders at brokers it is much more likely they will say "Buy me 5000 Cisco at $40 limit" compared to "I want to buy Cisco at $40.31" you can see this seemingly "mad" behaviour" on just about every stock and future chart in the world.
It is worth making yourself aware of it if you didnt know before.
Many punters have lost their shirts shorting examples like this when breaking to a new low which is just above a "big round number".
View license options --> Precision Decision Index for NinjaTrader
Using tick bars can help smooth out bar sizes (and price action) during transitions from busy to quiet sessions.
This aspect of market timing can make for a messy appearance and hard to interpret indicators. If you are trading overnight sessions and the busy day sessions it is worth considering using tick bars instead of timed bars as it makes for an "equality of view". Just left of centre shows an near perfect selling spot on intraday SP500 futures with 200 tick bars which was just two bars wide in the highlighted zone leading to a fast twenty point decline in ten minutes. Other low points which could be used as triggers to reduce the size of a short position were nicely identified also.
The trundle pattern explained, this is an important thing to read.
Please read this part carefully twice and look at the image twice. On the far right of the chart is an extended period in the highlighted zone and this clearly shows why "less is more" in terms of time in the highlighted zone verus time price oppurtunities. This shows "buyer acceptance" of the price at this level, meaning they think it is ok to be falling and don't rush in to buy it. You can also clearly see the market is already locked into a smooth downtrend.
If you see PDI trundling along in or close to the highlighted zones as if glued by gravity, it is generally a sign that the market is locked into a trend. These can be regarded as continuation patterns rather than reversal patterns.
Faced with the example below and being in a short position from 18.03 pm a good practice would be to engage a trailng stop once the trade commences, and in addition to this you can then (once observing the trundle pattern) begin to leg out of the position in stages once the PDI crosses above 50. Doing that below would have got you out very near the lowest point of the move.
These patterns are found commonly on intra day charts and make great opportunities for day traders seeking a low risk entry point.
Predictive drastic sentiment change illustrations
Unfortunately this kind of death trap price action is commonly seen in markets. PDI finds and promptly identifies it. We get a sell indication rapidly followed by a buy indication which is the death trap in this case, then just eight bars (24 minutes) later another sell indication appears. Notice that the most clearly defined of the triggers below was the actual "death trap" trade. The clever short sellers know what people run after to buy and make it look like something real is happening when all they really want is for you to cover your short and buy so they can sell to you at a better price.
Pinpointed top identification.
When a single bar trigger occurs it is given extra validation if a market is in cycling mode AND close to a previous area of resistance at $374 level.
The long term investor and trader can also benefit from using this product.
When PDI is employed on slower charts like daily or weekly one enjoys the knowledge that there is very little noise and randomness acting on the markets. Some nice buy and sell identifications preceded the top of the Covid crash top and its bottom. Chart below Goldman Sachs GS on daily data during the pandemic.
View license options --> Precision Decision Index for NinjaTrader
Precision Decision Index on Apple stock chart 20 minutes
Apple 20 minute chart below demonstrates cycling behaviour and you can now understand the points made above about how long PDI spends in the highlighted zone. The middle of screen example stays way too long and is not to be compared to the shorter time in the highlight zone examples. This chart demonstrates it very well.
The middle highlight does not go up much and soon goes lower.
Confluences
Please also be aware of the power of using confluences with this product.
Confluences are a very little used but efficient method of increasing the chances of a trade observation being valid and leading to good results. The example below is 10 minute chart of the Russell futures. Upper plot is length 150, corelength 100, smoothing 30. Lower plot is length 50, corelength 40 and smoothing 30. You are strongly encouraged to experiement with wildly different lengths.
Identifying confluences in the stock market can
be a valuable tool for traders looking to make informed trading decisions.
A
confluence occurs when two signals are given by the same indicator, using
different lengths, and these lengths must be very
different. This can provide a more comprehensive view of the
market, allowing traders to make more informed decisions about when to
enter or exit positions.
By using two
or more
different lengths, traders can gain a better
understanding of the market and make more informed trading decisions.
Overall, identifying
confluences in the stock market can be a powerful tool for traders looking
to stay ahead of the curve. By using indicators with different lengths to
identify confluences, traders can gain a more comprehensive view of the
market and make more informed decisions about when to enter or exit
positions.
Below is a super confluence which caught the absolute peak of the session when both lengths of PDI spotted the event.
There is another clear example to explain this posted in the member forum.
Follow this link to confluences Please allow 5 seconds for the forum page to load.
Creating strategies in NinjaTrader 8 strategy builder.
If you like to create your own strategies using the NinjaTrader 8 strategy builder, then you can do so easily as Precision Decision Index is callable in the same way a regular indicators are. So you can use this together with your favourite indicators to create a bespoke trading system to suit your own preferences.
Notes for beginners and intermediate traders
I am content to provide this product to beginners providing the above points are clearly understood. If you have any doubts about your trading ability then you can consider self calibration in the Trading IQ Game on this site which use real data and is 100% free to use.
Create a free account and trade 15 sessions (or more), endeavour to achieve a score above 1100 points. If you can do that you will have a good chance to go somewhere in your trading.
If you notice after a few sessions that you are not the best in the world yet then please see the trade reports which are generated after each session. Sample report here. Please allow 10 seconds to load as its doing a lot of maths. Look for the heading which says "List of suggestions to improve your statistics" and then you see the result of many hours of programming which generates these reports.
Call up some of your friends, challenge them to a contest.
You can of course play as a guest first to see if you like. Hope you enjoy it.
View license options --> Precision Decision Index for NinjaTrader
If you are interested to get Precision Decision Index for MetaTrader please drop me a message
Admin notes only page updated April 29th 2023 to be viewable on desktops and mobile devices with a responsive page design.
GA4 ready Added json-title-mark up heading1 1st june 2023 fixed schema