Traders Dynamic Index (TDI): The Complete Guide

The Traders Dynamic Index (TDI) is a momentum indicator written by Dean Malone for MetaTrader; the original code is dated 2006. It takes a 13-period RSI, smooths it into a fast line and a slow line, then wraps both in volatility bands, so a single panel shows trend direction, momentum and volatility. This guide goes through each line, the default settings as they appear in the code, how to read the signals, and the conditions in which the indicator gets it wrong.

• Five lines from one RSI: a green price line, a red signal line, two blue volatility bands and a yellow Market Base Line, all computed from the same 13-period RSI.
• Default settings: RSI 13, price line 2, signal line 7, bands over 34 periods at 1.6185 standard deviations, fixed levels at 32, 50 and 68.
• Three things to read: the green/red crossover, where it happens relative to the yellow line and the 50 level, and whether the bands are widening or tightening.
• It's a momentum tool, not a crystal ball: it lags at times and throws plenty of false signals inside a range.
• Paired with a written risk plan and disciplined trade tracking, it turns into something usable instead of just another squiggly line on your chart.

What the Traders Dynamic Index actually is

The Traders Dynamic Index, TDI for short, is a composite indicator: instead of measuring one thing, it stacks several calculations on the same RSI. A 13-period RSI is averaged twice, once fast and once slow, and Bollinger-style bands are drawn around its 34-period average. The result is a separate panel below your price chart, with five lines moving between 0 and 100.

The point is to give you in one look what you'd otherwise pull from three indicators. Trend? Check the green line against the yellow line and the 50 level. Momentum picking up or fading? Watch the crossover between green and red. Is the market getting busier or quieter? See whether the bands are spreading or squeezing, the way you'd read an ATR rising or falling back. On paper, that's clever design. In practice, it takes some screen time before your eye learns to sort the signal from the noise.

It's not a trend indicator in the classic sense, like a 200-period moving average. It's closer to a momentum gauge with volatility context added. It tells you where the market's dynamic stands right now, not where price will be in three days. A lot of beginners miss that distinction and end up expecting the TDI to forecast something it never promised.

Where the TDI came from and who built it

The TDI is Dean Malone's work. A copy of the MetaTrader 4 indicator hosted on the MQL5 Code Base, the site run by MetaTrader's publisher, names him as the author and keeps the file header: a copyright line dated 2006 in his name, along with the address of CompassFX. The firm still presents a version called TDI Pro as developed by Dean Malone for the MetaTrader 4 platform. That copy is itself a variant, to which a third party added visual alerts and a second signal line: the indicator has been picked up and modified several times.

We found no book or research paper behind it, unlike the RSI, which J. Welles Wilder presented in 1978 in New Concepts in Technical Trading Systems, as StockCharts' ChartSchool recalls. The reference is the code itself and the notes Malone left at the top of the file, where he describes a 'hybrid' indicator meant to track trend direction, market strength and market volatility. That matters because the versions in circulation differ in colors, in the type of moving average, sometimes in the settings. Where two sources disagree, this guide follows the original code.

A tool built by a practitioner isn't a lesser tool. But when those same notes state that the default settings are 'well tested and proven', no test comes with the claim: take it as the author's opinion, not as evidence. Test the indicator yourself and measure what it actually gives you on your market.

The TDI's components, one by one

To really understand the TDI, you need to break down each piece separately. Otherwise you're staring at a colorful plate of spaghetti with no idea what to eat first.

The RSI price line (green)

This is the engine of the whole thing. A standard RSI calculated on closing prices over 13 periods, then smoothed with a 2-period simple moving average. Two periods is minimal smoothing: the line stays almost as fast as the raw RSI, minus the jagged edges. It moves between 0 and 100, same as any RSI.

The trade signal line (red)

This is a slower simple moving average of that same RSI, over 7 periods by default. Its role mirrors the signal line in a MACD setup: when the fast green line crosses above the slower red one, you get a potential bullish signal. Below, a potential bearish one. It is the simplest signal to spot on the panel.

The Market Base Line (yellow)

This one is not a fixed level. It's the 34-period average of the RSI, sitting exactly halfway between the two bands, and it rises and falls with the market. Malone uses it for the underlying trend: his notes say to trade long when 'price' is above the yellow line and short when it is below. Price itself isn't drawn in this panel: read it as the RSI price line, the green one, which is what his entry rules compare with the yellow line. Don't confuse it with the 50 level, which is a horizontal line that never moves.

The volatility bands (blue)

Two lines set 1.6185 standard deviations of the RSI above and below the Market Base Line, measured over the same 34 periods. They are Bollinger Bands applied to the RSI rather than to price, with a tighter multiplier than the two standard deviations around a 20-period simple average recommended in the MetaTrader 5 help on Bollinger Bands. The channel widens when the swings in momentum get larger and tightens when the market goes quiet. For the same idea read directly on price, look at how supply and demand zones mark the levels where pressure shifts.

The three fixed levels: 32, 50 and 68

The panel also draws three horizontal lines. 50 separates bullish from bearish momentum, as on any RSI. 32 and 68 play the part of the RSI's 30 and 70, the two thresholds beyond which, according to the MetaTrader 5 help on the RSI, the indicator usually forms its bottoms and tops. Malone's notes add that the yellow line generally travels between 32 and 68, and that a bounce of the yellow line off either level is worth watching as a possible reversal.

The formula and default settings

These are the values written in the original MetaTrader 4 code, with the ranges the author gives in its comments. EarnForex's port for MT4, MT5 and cTrader, whose code is public and which states it is based on Dean Malone's indicator, keeps the same ones.

Spelled out: RSI = RSI of closing prices over 13 periods. Price line = simple average of the RSI over 2 periods. Signal line = simple average of the RSI over 7 periods. Market Base Line = simple average of the RSI over 34 periods. Upper band = base line + 1.6185 × the standard deviation of the RSI over 34 periods; lower band = base line minus the same amount.

Where does 1.6185 come from? The code doesn't say. The figure sits right next to the golden ratio (1.618), but the author gives no reason for the choice. In the original code it isn't even a setting: the number is written straight into the formula, and it is EarnForex's port that turns it into an input. The practical effect is easier to pin down: at 1.6185 the bands hug the base line more closely than at Bollinger's 2, so the green line reaches them more often.

The 32 and 68 levels sit slightly inside the RSI's usual 30 and 70. You can ignore them and work only with the crossovers and the base line, or on the contrary refuse to buy a crossover that prints above 68. Both rules hold up, as long as you apply the same one trade after trade instead of switching depending on your mood that day.

A worked example with numbers

The figures below are made up to show the arithmetic; they are not market data. Suppose that on a 15-minute EUR/USD chart the 34-period average of the RSI is 54, and the standard deviation of the RSI over those 34 candles is 8.

• Market Base Line (yellow): 54.
• Upper band: 54 + 1.6185 × 8 = 54 + 12.95 = 66.95.
• Lower band: 54 − 12.95 = 41.05.
• Channel width: 66.95 − 41.05 = 25.9 points.

Now suppose the green line reads 61 and the red line 57. Green is above red, above yellow (54) and above 50: every condition of Malone's most selective entry is met. Run it again with a standard deviation of 3: the bands come in to 58.86 and 49.14, a channel of 9.7 points. Same crossover, same levels, but the green line at 61 is now outside the upper band: momentum has overshot its own recent range, in a market that was flat a moment ago. The crossover is identical in both cases. What changes is the context the bands provide, and that is what a plain RSI doesn't show.

How to actually read the TDI

Three readings combine for the entry, and Malone's notes turn them into three rules, from the most frequent to the most selective. A fourth note covers the exit.

1. The RSI / signal line crossover

When the green line crosses above the red one, short-term momentum has just turned up; the opposite cross says it has turned down. Taken alone, that is Malone's 'scalping' rule: long while green is over red, short while red is over green, out on the opposite cross. Picture EUR/USD stuck in a tight range: the green line has been oscillating under the red one for twenty candles, then it crosses decisively above it right as price breaks a horizontal resistance. That's the kind of confluence scalpers look for on the TDI.

2. Position relative to the base line and to 50

A crossover carries more or less weight depending on where it happens. Malone's 'active' rule adds the yellow line: buy only when green is above both red and yellow. His 'moderate' rule adds the 50 level on top: green above red, above yellow and above 50. The logic is the one you'd apply to a classic RSI: a bullish crossover above 50 confirms momentum that is already positive, while a bullish crossover under 50 is, until proven otherwise, a bounce inside weak momentum. Each added condition removes trades. Does it remove more losers than winners? Only your own trade history can answer that.

3. The width of the volatility channel

Malone reads the blue lines as the market's overall strength: expanding bands mean a strong, trending market; constricting bands mean a weak, ranging one. He adds a warning: when the bands are extremely tight, expect an economic announcement or some other event to spike the market. A squeeze is therefore not an entry signal. It tells you the crossovers you're seeing carry little information and that the real move hasn't started. A cautious way to apply it: wait for the channel to open up again before trusting a crossover.

4. The exit

Exits follow the same lines: Malone closes a long when green crosses back below red, and a short when it crosses back above. With one refinement: if the green line has pushed through a blue band, he suggests exiting when it crosses back inside the channel.

Trading strategies built around the TDI

The TDI comes from forex: its code carries the address of CompassFX, whose site is devoted to forex and futures trading, and the simplest of the author's rules is called 'scalping'. His notes set no timeframe, though. Here are four ways to use it, for scalping as well as day trading; adapt them to your own style and market.

• Filtered crossover scalping: you only enter on a RSI/signal crossover that happens on the right side of 50, with a volatility channel that's actively widening. Tight stop, quick exit once the green line crosses back the other way.
• On longer timeframes like H1 or H4, some day traders wait for price to test a structure level (support, resistance, moving average) at the same time as a TDI crossover in the same direction, which cuts down trade frequency but raises selectivity.
• In trend trading, you ignore minor crossovers and instead watch whether the RSI stays persistently above (or below) 50 without ever fully retracing across it, a sign of a strong trend where you're hunting re-entries rather than reversals.
• A defensive variant is exiting a trade as soon as the volatility channel sharply tightens after an expansion phase: in Malone's reading, constricting bands describe a weakening market, and you don't wait for the opposite crossover to act on it.

Whichever variant you pick, the TDI only holds up over time inside a written system with clear entry, exit and position sizing rules. Without that, you're improvising candle by candle, and the indicator turns into an excuse to react emotionally rather than a decision-making tool. That's exactly the kind of drift that a proper trading playbook is meant to prevent, by documenting which setups actually work for you instead of chasing every signal the panel throws out.

TDI settings by timeframe

Malone gives a single set of defaults, not one per timeframe, and says only that you can change them to fit your trading style. What changes when you move from M5 to H4 is how much market the same 13 and 34 candles cover.

Two consequences. On M5 the yellow line summarizes less than three hours of trading: it turns with every session, and a single spike at the London open can account for most of the band width. On H4 or the daily chart it summarizes a week or more, and crossovers become rare. If you shorten the RSI period within the author's 8 to 25 range, the green line swings wider and crosses more often; if you lengthen the band period within 20 to 40, the base line and the bands react more slowly. Change one setting at a time and take the time to backtest the strategy before you adopt it: a setting picked on three weeks of charts hasn't seen enough trades to prove anything.

Combining the TDI with other indicators

The TDI is easier to trust as a confirmation layer than as a standalone system. Pairing it with a simple moving average on the price chart, for instance, gives you a trend filter: you only take TDI crossovers that align with the direction of a 50 or 200-period average. That one rule removes every counter-trend crossover by construction.

Some traders also stack it against a MACD, checking whether both tools point the same direction before pulling the trigger. It sounds redundant since both derive from momentum logic, but a MACD calculated on price and a TDI calculated on RSI don't always agree, and that disagreement itself is informative: it can flag a market that's indecisive rather than genuinely trending. If you're more of a pure price action trader, you can still use the TDI as a secondary filter, entering only when a candlestick rejection at a key level coincides with a TDI crossover, which anchors the signal in something the market actually printed rather than just an oscillator reading.

Whatever combination you land on, write it down. Vague plans like 'I use TDI with some other stuff' collapse the first time you're staring at a live chart with money on the line. A concrete entry in a journal you actually keep, describing exactly which confluence you required and whether it held up, teaches you more in three months than reading ten more articles about indicator combos.

The TDI on MT4, MT5 and TradingView

The TDI doesn't come pre-installed on MetaTrader: the MetaTrader 5 help on technical indicators counts 38 built-in indicators and points to the Code Base for custom ones, and the TDI is one of those. It is distributed as a .mq4 or .mq5 file, on the MQL5 Code Base or in the public repository of a port. Installation follows the same routine as any custom indicator. Open your terminal's data folder with the 'Open Data Folder' command of the File menu, described on the help's page on platform start, drop the file into the MQL4 or MQL5 'Indicators' folder, where the help's page on robots and custom indicators says all indicators are stored, restart the platform, then find it in the Navigator window.

Once it's installed, the settings window lets you adjust the RSI period, the two averages and the volatility band period, along with a color for each line. A word of caution: the TDI has been re-coded several times, and versions differ. A compiled .ex4 or .ex5 file is an executable whose code you can't read, so prefer a file that comes with its source (.mq4 or .mq5), and be careful with versions that display a higher timeframe on your chart: their last values keep redrawing until the higher-timeframe candle closes, which distorts any backtesting done by eye. A demo account is enough to run a fresh download for a few sessions before trusting it with real capital.

On TradingView, the TDI is found among the scripts published by the TradingView community, where several versions coexist. Before you adopt one, open its inputs and check that it uses RSI 13, bands 34, lines 2 and 7 and, if the script exposes it, a multiplier of 1.6185. A script that uses 2 standard deviations or an exponential average draws a different indicator under the same name.

Limits and false signals of the TDI

No indicator escapes this section, and the TDI is no exception. Its biggest weakness shows up in ranging markets, where price oscillates without commitment and the RSI keeps flipping around 50. In that environment you'll see crossover after crossover, most of them meaningless, and if you trade every single one you'll bleed small losses through spread and slippage alone. This is a textbook trigger for overtrading, where an indicator that looks busy convinces you the market is offering more opportunities than it really is.

There's also a lag problem baked into any RSI-based tool. Because the lines are smoothed averages of an already-lagging oscillator, the TDI reacts to price, it doesn't predict it. By the time a crossover confirms, part of the move has already happened. That's not necessarily fatal, plenty of trend-following systems accept lag as the price of filtering noise, but you need to know that going in rather than expecting the TDI to catch tops and bottoms with precision.

Finally, the TDI knows nothing about context: it reads closing prices and nothing else. A major release can throw the bands open and trigger a crossover that reflects a headline, not a shift in momentum, so the job of checking the economic calendar sits entirely with you. And a good technical signal is never a guarantee: risk of ruin exists with the best indicator in the world if your position size is wrong.

TDI vs classic RSI vs Stochastic

It helps to place the TDI next to the two indicators it clearly borrows from. A classic RSI gives you one line and two static thresholds, 70 and 30 in the MetaTrader 5 help on the RSI. It's simple and well documented. The TDI takes that same RSI, smooths it, adds a signal line and wraps volatility bands around it, essentially trying to answer three questions where the plain RSI only answers one.

The Stochastic oscillator, meanwhile, measures something structurally different: where the close sits relative to the price range of the period, as the MetaTrader 5 help on the Stochastic Oscillator puts it, with 20 and 80 given as example thresholds, not the RSI's average gain versus average loss. The two are easy to confuse because both oscillate between 0 and 100 and both use a signal line for crossovers. But a Stochastic tends to react faster and whipsaw more in ranges, while the TDI's extra smoothing layer trades some of that speed for readability. Neither is objectively better, they just suit different holding periods and different tolerance for noise.

Against the RSI alone, then, the TDI adds three things: a trigger (the crossover of its two lines), a moving reference (the yellow line, where the RSI only has a fixed 50) and thresholds that adapt to recent volatility (the bands, where the RSI only has 70 and 30). It pays for them in two ways: more lag, since every line is an average of an indicator already computed on the past, and five numeric settings instead of one, which means five opportunities to fit the indicator to history rather than to the market.

How Tradoshi helps you

An indicator like the TDI only earns its place on your chart if you can prove, with your own numbers, that it actually improves your results. That's where a structured trading journal changes the conversation: instead of feeling like the TDI 'works', you import your trades from MT4, MT5, cTrader or a crypto exchange, or log them manually, and you check your win rate, profit factor, expectancy and Oshi Score on the trades where you actually used a TDI-based setup versus the ones where you didn't.

Tradoshi also lets you tag each trade with your own free labels, note plan adherence, and record an emotional check-in before you pull the trigger. If you decide TDI crossovers above 50 are your edge, you can label exactly that, then later review whether you stuck to the rule or jumped in on a random crossover out of impatience. The discipline score tracks how consistently you follow your own stated rules, which matters more than the indicator itself: a mediocre setup traded with iron discipline usually beats a great setup traded on impulse.

On the risk side, the position size calculator and customizable risk rules help you keep every TDI-based trade within a fixed percentage of your capital, so a string of false signals in a range doesn't turn into a blown account. And when a trade goes wrong, the trade replay and debrief tools let you rewatch the setup with your own notes attached, which is usually where you spot that the channel was actually tightening the whole time, a detail you missed live but won't miss twice.

Frequently asked questions