NORMALIZED EFI Trading Guide
The Normalized EFI (Elder Force Index) measures the foundational power driving recent price action by multiplying the difference in closing prices against prevailing volume. To increase consistency and comparability across varying volatile conditions, this version divides its raw result mathematically against the True Range and Volume SMA.
What does the indicator show?
- EFI Area Visualization: A dynamic shaded region that oscillates above and below a central zero line. Green areas indicate upward momentum fueled by strong volume, whilst red areas map downward dominance.
- Threshold Parameters: In normalized environments, the indicator enforces soft boundary metrics (+0.5, -0.5) aiding traders to contextualize whether the generated force genuinely categorizes as an extreme anomaly.
Key Settings
- EFI Length: Determines the lookback period and Exponential Moving Average smoothing utilized to map the raw force vectors.
- Normalization Length: The duration referencing the Average True Range and SMA volume metrics used to normalize the output.
- Use Normalization: Can be dynamically toggled off to analyze the absolute, unbound raw EFI index numbers.
How to use Strategy Parameters (Condition Source)
Extracting data directly from Normalized EFI provides a smooth momentum oscillator incorporating the weight of trade volume into trend directional calculations.
Oscillator & Sentiment Logic
Integrate metric values cleanly into structural rules within the Strategy Tester.
efi— The core decimal metric produced by the indicator algorithm. Values climbing far above zero represent explosive buy volume pressure.aboveZero— Yields a continuous true (1) condition as long as the EFI is operating strictly in bullish positive territory.belowZero— Yields a continuous true (1) condition whenever the EFI tracks in negative distribution environments.
Strategy Example: To prevent executing losing trades in weak pullbacks, append the condition aboveZero is true to confirm bullish volume is backing the intended upswing.