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Force Index

Liens connexes:

Acceleration / Deceleration Oscillator

Accumulation / Distribution

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Average Directional Movement Index

Average True Range

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Bollinger Bands

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Market Facilitation Index

Momentum

Money Flow Index

Moving Average

Moving Average Convergence / Divergence

Moving Average of Oscillator

On Balance Volume

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Relative Strength Index

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Standard Deviation

Stochastic Oscillator

Williams Percent Range

FRC - Force Index

Force index estimates the force of bulls during increases and the force of bears during decreases. This index was invented by Alexander Elder. It connects the basic elements of market information: price trend, its drops, and volumes of transactions. Force index may be used in combination with the moving average as well as separately. With a short moving average contributes it is possible to find the best opportunity to open and close positions. If the approximations are made with long moving average, the index can forecast trend changes.

Following signals are used in this indicator:

  • It is better to buy when the forces fall below nought in the period of increasing tendency;
  • The force index signalizes the continuation of the increasing tendency when it reaches the new top;
  • The signal to sell comes when the index becomes positive during the decreasing tendency;
  • The force index signalizes the continuation of the decreasing tendency when the index falls to the new bottom;
  • The signal of a trend change appears after the Force index stays at one level for a certain period of time. This happens when the price changes are not backed with a sufficient volume change.


Calculation:

The force of every market movement is characterized by its direction, scale and volume. If the closing price of the current bar is higher than that of the preceding, the force is positive. If the current closing price is lower than that of preceding, the force is negative. The greater the transaction volume is, the greater the force is.

FORCE INDEX (i) = VOLUME (i) * ((MA (ApPRICE, N, i) - MA (ApPRICE, N, i-1))

Where:

FORCE INDEX (i) - current bar force index;
VOLUME (i) - volume of the current bar;
MA (ApPRICE, N, i) - any moving average of the current bar for N period;
simple, exponential, weighted or smoothed;
ApPRICE - applied price;
N - smoothing period;
MA (ApPRICE, N, i-1) - any moving average of the previous bar.
Similar information about indicators you can find in information system of trade platform MetaTrader 4 (Help-> Help Topics [F1] -> Ananlitics -> Technical Indicators).

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