KAUFMAN EFFICIENCY INDEX Trading Guide

The Kaufman Efficiency Ratio (ER) is a quantitative technical analysis tool. kaufman_efficiency_index.js Kaufman Efficiency Ratio (ER) Index. Measures the "Trend-to-Noise" ratio.

What does the indicator show?

• Market Structure & Momentum: Visualizes prevailing trend directions and key reversal zones.
• BUY / SELL Signals: Highlights confirmed entry and exit opportunities based on quantitative rules.
• Dynamic Boundaries: Provides adaptive levels for managing trade risk and reward expectations.

Key Settings

• Lookback Window (lookback): Controls the calculation period and sensitivity for market detection.
• Efficiency Ratio (er): Controls the calculation period and sensitivity for market detection.
• Efficiency Ratio (0-100) (er): Controls the calculation period and sensitivity for market detection.
• Directional ER (-100 to 100) (directionalER): Controls the calculation period and sensitivity for market detection.
• High Efficiency (> 60%) (isEfficient): Controls the calculation period and sensitivity for market detection.
• Low Efficiency (< 30%) (isChoppy): Controls the calculation period and sensitivity for market detection.

How to use Strategy Parameters (Condition Source)

Within the Strategy Tester module, this indicator can be used both as a direct signal source and as a market-state filter.

1. Signal Events

• isEfficient - High Efficiency (> 60%) event signal.
• isChoppy - Low Efficiency (< 30%) event signal.

2. Filters and Trade Levels

• lookback - Lookback Window value used for structural qualification or thresholds.
• er - Efficiency Ratio value used for structural qualification or thresholds.
• er - Efficiency Ratio (0-100) value used for structural qualification or thresholds.
• directionalER - Directional ER (-100 to 100) value used for structural qualification or thresholds.

Strategy Example: Enter Long when buySignal is true and trendFilter == 1, ensuring trades align with dominant momentum.