The Dynamic Trader Indicator (TDI) was created by Dean Malone. It is based on the Relative Strength Index (RSI) and moving averages as well as Bollinger bands. These combined indicators provide traders with signals and an accurate description of market movements.
This TDI indicator for MT4 can be downloaded in a separate window below the price chart. It has a red line and a blue line. The blue line is known as the fast, while the red line indicates that a longer period of time is used to calculate it. Essentially, both lines represent the strength and volatility of the market. When these two lines intersect, investors will receive signals to trade.
In addition to these two RSI lines, the TDI indicator also includes three Bollinger bands in addition to these two RSI lines. The blue line forms two lines and represents the area between the numbers 68 and 32. The central axis, or middle line has yellow color. The area above the 68 mark is considered underbought. The area below 32 is the area below 32.
TDI Trading Signals
Here is the main question: how do you receive trading signals by using this TDI indicator? Quite simply, you have to watch when the red and blue lines meet. A buy signal occurs when the blue line intersects the red line below it. If it does intersect with the red line from the top, that is a clear indication of a sell signal.
To get a stronger signal, it is wise to use the yellow line. For example, if the red line crosses the yellow line below, it indicates a stronger bull market. Therefore, investors should buy. Alternatively, when the red line crosses the yellow line from top to bottom and at the bottom, this is a bearish signal and you must be ready to open a short position.
The indicator also gives an indication in cases where the line crosses the 50 32, 68 and 50 levels. Overbought zones indicate the possibility of a market correction.
Exit strategy
Buy positions. Take profits at the level next to the resistance level or when the blue line is crossed by the red line above.
If you sell your position, take profit at the next support level or when the blue line is crossed by the red line below.
Summing up
The Dynamic Indicator for Traders is a fantastic tool for identifying buy and sell signals. The essence of it is that you just have to wait until the lines cross and then start trading. Be aware that the indicator joins the RSI and moving averages as well as the Bollinger Band indicator. This means that you can utilize the indicator in a separate strategy. However, it is best to combine it with other strategies to create the best possible trade entry.
