Force Index indicator |
The Force Index indicator is an index of strength, also known under the abbreviation FRC. This oscillator is included in the number of basic MT4 and MT5, but for some reason it is rarely used in strategies. It is inferior to stochastic and RSI leadership, although its formula also has interesting distinctive features. In addition, it should be added that the author of the Force Index is A. Elder, who is familiar with other indicators / strategies (for example, “Three screens”).
Force Index: essence, formula and application
The Force Index is an oscillator that, however, has no range boundaries. The central level can be called zero (mark “0”), relative to which it moves in both directions. But there are no overbought and oversold zones here, so there are difficulties in identifying potential reversal points.
The task of the oscillator is to measure the strength of the bulls when the trend rises and bears when it falls. According to the author’s recommendation, it is better to use the indicator at least in conjunction with a moving average, the period of which is individual for each timeframe: for minute intervals – period 2, hourly – 13. However, these are not strict conditions.
Interpreting signals is relatively complex. Elder proposes to build on how the Force Index is located relative to the zero level and where it is directed in relation to previous positions. In other words, the signal strength is determined by the local extremum and the subsequent reversal. For example, if in previous periods the Force Index declined slightly and turned sharply, and at the current moment the minimum is visually much lower, the signal is strengthened. The same essence is with the stochastic, with the only difference that it has a clear gradation of zones, and the current extremes of the Force Index must be compared with the previous highs / lows.
Formula indicator Force Index:
Force Index (i) = Vol (i) * ((MA (ApPrice, N, i) – MA (ApPrice, N, i-1)), where
- Vol (i) – current candle volume.
- MA (ApPrice, N, i) – any type of moving current candle for N periods.
- ApPrice – price type (“price to” in the indicator settings).
- N – smoothing period.
- MA (ApPrice, N, i-1) – any type of moving previous candlestick.
Conclusion… The Force Index is an interesting oscillator that can help out at certain points in the absence of atypical surges in volatility. A signal to open a deal – crossing the zero level by the indicator – is its most frequent use in strategies. The screenshot shows that this idea is not devoid of logic, provided that the intersection occurred at an almost right angle with respect to the horizontal of the level. But additional filters will not be superfluous.