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PTS-Precision Divergence Sell Finder for MultiCharts

Designed to seek out bearish divergences that occur in the Demand Index Indicator over a multitude of different look back lengths

Tired of all the hard work seeking out nice patterns for selling cryptos, futures, forex and stocks? Let this product save your valuable time

 Saves hours of time to find divergences in a rapid and precise manner works in any time frame

PTS-Precision Divergence Sell Finder on Etherium ETHUSD speeded up data 10 minute chart

 

Tutorial Video

PTS-Precision Divergence Finder Sell shows the power of divergences on speeded up daily data below

This product works in any time frame in MultiCharts



Video

PTS-Precision Divergence Finder Sell shows the power of divergences on speeded up daily data on a UK stock

Please note this product only finds sell signals in MultiCharts



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PTS Divergence Finder Sell - otherwise known as Precision Divergence Finder Sell.

Description for MultiCharts useage



The PTS Divergence Finder Sell Indicator by Roger Medcalf  -  Precision Trading Systems.


This indicator only give Bearish - Sell Indications.

First and foremost, I have been asked many times why I did not provide a sell divergence indicator while happily providing a buy signal divergence finder

for many years.

I gave the answer that sell divergences are less reliable than the buy divergences, which is still true.

Some solutions to change this were found, not by giving in to peer pressure or by modification of this indicator which I made more than fifteen years ago,

but by changing the default settings to be more strict.
 

The nature of fear and greed are entirely different as fear is fast and instinct driven at market tops as the opposite emotions of fear and euphoria can

instantly lead a human brain into the survival mode of fight or flight.

In the bottoming or oversold conditions in markets greed probagates slowly in buyers as they consider picking up value purchases at market lows with a

mindset of having a low expectation of success.

This is what causes the asymmetry in market tops versus bottoms. Therefore the asymmetric settings of the buy and sell versions of this product are now

explained for clarity.


Image below shows almost exact pinpointed high points which went lower


PTS Sell divergence on MultiCharts


I have decided to release the sell divergence indicator with "stricter" default settings. "

The Demand Index length used is 55 and the difference it needs to trigger a signal is 12. These of course are user adjustable. The strictness means there

are less bad signals.

The results are many tops and intermediate high points defined with pinpoint accuracy. As expected there are some disastrous signals in the midst of

violent up trends which a trader can lose on if not using risk management and stops. Likewise it frequently finds the exact top.


How does the PTS Divergence Finder Sell Indicator work?




The PTS Divergence Finder Sell Indicator accurately measures the number of divergences which have occurred in Demand Index, which is a volume based

indicator.

This is a histogram style indicator for subgraph two, which plots spikes which appear like stalagmites coming up from the base.

The indicator examines multiple lookback periods of the volume based Demand Index Indicator for the length that you specify. It finds high points in

prices where the DI is not making a new "local" high and missing it by the "difference" setting you input.


Image below shows a tight group of bearish divergences identified heralding a nice drop in price

PTS Sell divergence on MultiCharts


It is therefore best to focus on instruments like stocks and futures and cryptos that have large volumes and lots of participants.

Liquid markets where many people are voting on the market direction give the best results.

A total of twenty look back periods are scanned on every bar and these are hard coded and non adjustable. The length of Demand Index is user adjustable

but it is suggested not to wander too far below the default setting of length 55.

The second user adjustable field is difference and this represents the difference between Demand Index now and Demand Index N bars ago. (N being 20

different look back periods of various periods)

You will understand that a length 18 Demand Index produces a much more volatile plot than a 80 period plot.

For this reason you can find short lengths of Demand Index and small difference values will produce many more signals of divergences as there is higher

volatility in the underlying indicator.

You will observe this when you use it. You can set it to give hundreds of insignificant values but it is best used so you just see the significant ones by

following the guidelines below.

Consider this like using a 20 period MA on a 30 second chart compared to a 20 period MA on an hourly chart.

Clearly the hourly MA change of direction is much more meaningful and important.


Suggested settings for various lengths:

Demand Index lengths less than 12 are not generally recommended for finding "good" sell divergences


DI Length 20 = difference of 20 - 35

DI Length 30 = difference of 15 - 33

DI Length 40 = difference of 13 - 31

DI Length 50 = difference of 10 - 19

DI Length 60 = difference of 9   - 15

DI Length 70 = difference of 8   - 14

DI Length 80 = difference of 8   - 13

DI Length 90 = difference of 7   - 12

DI Length 100 = difference of 7 - 11

DI Length 110 to DI Length 200 = difference of 6 - 10

DI Length > 200 = difference of less than 6


Output relevance.

The minimum value is zero which means there are no divergences found, you can then find values from 1 to 20 which is a count of the number of instances found.

Paradoxically it is not so significance if the number is very high or very low as a major top occurring on a multi month high may just show a reading of 1,

but some minor mid up trend rally might show a reading of 9.

Be suspicious if you see too many large readings of 12 to 18 reoccurring as it is likely that the indicator is plotted on a market in a very long term and

rapid up trend which is dangerous to be shorting.


Image below GBPUSD finding the exact peak on a 10 minute chart

PTS Sell divergence on MultiCharts on Forex



Execution of trades.

Exercise caution with this product.

Risk control is essential and risking more than 1% to 1.5% of your capital from entry price to stop would not be advised.

As with hunting, firing out lots of small trades in a shot gun approach will lead to better results than gambling all on the first signal you see.

There is much more chance of hitting a bird with a shot gun than a canon and the ammunition is much cheaper.

Always always use a stop loss. Something like 3 to 7 times a fifty period average true range for example.


Whilst it is often possible that a spike appears exactly at the precise high of the week or year and could be the only one you see all year it is risky just to

short it or sell it instantly as some markets produce several failed signals which continue to rally higher.

The safest and least risky method is to wait for the trend to begin falling after you see a divergence. This is subjective to your own definition of how to

measure the trend as "falling" but I would suggest waiting for a 8-20 period Exponential average to turn down before selling.

Once the trade is entered you can implement a trailing stop to allow maximum potential gains and if your style is one of wanting to take quick profits then

it is wise to take only some partial profits and give the sell off a chance to go lower and exit the remainder when the trend changes. If the move was

picked up near the absolute top it could be a very large collapse in the downtrend.

Sometimes you might wait up to twenty five bars after the divergence is seen before the trend begins falling. Much longer than this an it gradually

negates the signal as it shows the buyers have become stronger and the safest decision is to stay out of the market.

It is not unusual for the divergences to mark the exact high of a market and this high can lead to a large move down.

There are however frequent failed divergences and these can be treated in the same technical analysis manner as a failed head and shoulders or failed

double top where the failure to fall indicates a likelihood of a continuation higher, meaning it is time to cut a loss.

This indicator only gives sell signals. Every single signal will be given in some degree or another in an up trend at the highest high price.


Image below shows the exact top was identified

PTS Sell divergence on MultiCharts 8



Market selection is important.

Avoid markets in an endless up trend. Look for ebbs and flows in a major down trend.

Best results are on liquid markets in a good long term down trend that has frequent rallies, you can observe the past signals and often history repeats

with the good previous signals tending to indicate that future signals may also be good. (This is not certain of course)

This is also true of a market showing several historically bad divergence signals leading to more bad signals.

If the past performance of this indicator is poor on the market you are viewing, then move to another market until one is found where the readings show

good price dips after the signals in historical data.


Time frames.

This product can be applied to any time frame of market but be aware as is stated above, the slower time frames yield more valid signals and shorter time

frames lead to more randomness and noise ridden plots of lower significance. That said, it provides a valid reason to enter a trade and can give good

results providing good stops and risk control are used. I have seen plenty of valid signals on 30 second charts right up to weekly charts.


Idiosyncrasies.

It can often be seen that multiple divergences occur over a range of ten to thirty or so bars during a very gentle spiky kind of rally.

This can be treated in the same way as above - waiting for the trend to fall after the last divergence occurs is the way to play it.

Groups of divergences can indicate some patient insider selling patterns in anticipation of some bad news they might know.

Thanks for reading this and please read it a few more times to fully understand the points mentioned.

After that please spend some time changing settings and markets to fully appreciate how it operates.

Roger Medcalf - Precision Trading Systems




Disclaimer


Please read the Disclaimer carefully


All the indicators, functions and signals available from Precision Trading Systems have been selected for their high levels of efficiency as trading tools.

However this does not guarantee success when using them on the markets you choose to trade in and readers must be aware that past performance is
not indicative of future results as market conditions are dynamic and ever changing.

Risk of losses are high with even the best systems, and a good understanding of risk control is required before using any products you have received from PrecisionTradingSystems.

You are responsible for ensuring all precautions have been taken in your trading decisions. When using these products you are entirely responsible for ensuring that you risk only what you can afford to lose and Precision Trading Systems cannot be help responsible for any losses you may incur when designing your own home trading system or using these advanced products.

These products and formulas are designed for traders who have some previous experience of trading and an appetite for learning new things. If you do not consider yourself in this category then please invest some time to study the pages on this site methods carefully before risking any money.

If you open any trading accounts, spread betting accounts, bookmaking accounts or derivative accounts via the links on this site you accept complete responsibility for your actions when placing trades and bets.
Refunds policy
PrecisionTradingSystems has taken great care to ensure the products on this site are well programmed to work as intended, and the nature of software is such that items cannot effectively be "returned" in the same way as if one had bought a set of golf clubs etc.


Refunds will be given for the following reasons


All my code is guaranteed to work correctly (which does not mean it is guaranteed to make profits on every market you select) in the unlikely event that one of these products computes a false value due to a programming error then Precision Trading Systems will issue a full refund of the purchase price if the fault cannot be corrected within 5 working days from the receipt of proof in the form of screenshots and a description.

These must be reported within 7 days of receipt of items.

If the indicator verification (compiling) is an issue Precision Trading Systems can log in via remote pc access and correct it for you.


Instructions for purchase and installation


 
Open up and log in to your MultiCharts account and click on help about and on the 5th line you will find the machine id number

Copy and paste the machine id number it into the Paypal form as below when purchasing

After payment arrives I will email you the NDA form (for new customers) and then the product via Google drive link for download


When purchasing this item you agree that you have read the disclaimer above

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About

Precision Trading Systems was founded in 2006 providing high quality indicators and trading systems for a wide range of markets and levels of experience.

Supporting NinjaTrader, Tradestation and MultiCharts, TradingView and soon a resumption on the MetaTrader4 platform.

 

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