PPI was designed by Precision Trading Systems to compute the exact probabilities of trend going to Y-price by X-Time
Precision Probability Index is a simple to use indicator which computes the odds of a trend continuing or not
The Gold Version comes with two types of strategy and an indicator for advanced usersSignal line crossing strategy ( Generates trade on the crossing of the signal line on the main plot ) WATCH PPI VIDEO HERE
Level cross over strategy ( Generates trades on the cross of the level of probability you specified ( default is the crossing of 50% )
Methods of usage
The indicator can be used as a confirmation tool to enhance your own strategies profitability
Know exactly what the odds are of the market rising or falling
Observe the crossing of the signal line on the main plot to warn when the probabilities are moving
As a risk calculation aid to know the odds of your trade going in your favor in X number of bars into the future
With a distorted exaggeration factor one can use it as a binary trend indicator ( Ranging from 0 to 100 )
An excellent divergence indicator giving reliable signals
Explanation of how it works
The indicator computes the exact mathematic probability in percentage terms of a slow moving average being above a faster moving average in a certain period into the future. This produces a sinusoidal plot as shown in the photos.
The settings used allow incredible versatility of uses. A smoother is provided on the main plot which irons out the false and useless wiggles and this is user adjustable of course.
There is a signal line which can be shown or hidden depending on preference and useful trade signals can be generated when the main plot crosses above or below the signal line plot.
Other signals can be generated by the cross above or below 50%. Here also this is configurable to compensate for bullish or bearish technical set ups. The default value is 50% but you can set it to buy above 51% or 50.0002% and sell below 51% or 50.0002%.
Dead spots are can be created simply by leaving a gap between the buy above input and the sell below input. EG Buy above = 50.04% sell below = 49.96% gives a symmetrical Long-Short strategy with a dead spot of 0.08 wide. The concept of this dead spot feature is designed to reduce over trading at points of near equilibrium market conditions.
You can skew the dead spot to any level you wish, for example if you are bullish of the market you might like to buy sooner and sell later, so you can find the mid point of 49% and set buy above to 49.02% and sell below to 48.98%. Huge flexibility can result from doing this.
In addition there is also an exaggeration factor which distorts the volatility component of the model to allow exaggerated readings, the reason for this is to enable Precision Probability Index to function as a binary trend indicator, or as an accurate probabilistic computer, and various mutation in between these.
Precision Probability Index GOLD comes with two strategies.
1. The crossing of the signal line strategy
2. The above below zero strategy.
This product has been tested by NinjaTrader staff and has passed their testing procedures
Chart below PPI trading on the E-mini SP500 Futures in a 10 minute time frame chart
Precision Probability Index is used to trade on the crossing of the 50% line (The 50% line can be adjusted up or down to factor in up or down trend biases)
Notice the additional bonus observation of a bearish divergence that validates the sell signal which occurs afterwards
Video showing how to use Precision Probability Index in NinjaTrader
The 20 tick time frame is used to demonstrate in a fast and fun way. In actual trading use it is suggested to use a slower time frame.Precision-Probability Index on Cac 40 futures using a 1 minute chart.
View license prices for PPI
Chart below: CL 2 Renko bars
Precision Probability Index works on any chart type in the Ninja Trader platform, includin the Renko type below.
Here you can see the "above below strategy" giving timely trades on the CL light crude oil futures as the buying pressure alters the probability
Precision Probability Index shown below on 1 hour chart of CL Crude oil futures.
This indicator was designed to help YOU be the wise guy in the market.
Chart below: CL Futures 60 minutes ( USA Crude oil futures )Precision Probability Index is used to trade on the crossing of the 50% line
Notice how well the strategy stays short during the volatile downtrend when many other strategies would be shaken out.
These little differences in trading strategy performance give enhanced performance to investors over the long run, the dealing costs are reduced and the financial ratios such as risk-reward, calmar and the lake ratio also improve.
Whilst the indicator plot may resemble demand index or relative strength index or money flow index, the trained eye can differentiate between them.
Precision Index Oscillator markets and their suitability.
Stocks, futures, bonds (real time and end of day)Forex: Pi-Osc will perform on forex but as forex does not print volume in the same way the above do, performance can be less than optimal as less information is being given to Pi-Osc.
Forex futures: These instruments do have reported volume so Pi-Osc will perform normally.
Chart below: Daily chart of Burberry PLC with a nice buy signal and a double pi top which didn't go far.
Precision Index Oscillator chart types in for Tradestation
Chart below: GBP-USD 15 Minutes
Precision Probability Index can be used on Forex, futures, stocks, indices, bonds etc.
View license prices for PPI
