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Hello, does anyone have an indicator like this, or can someone create
the AFL for this one (perhaps with param for the slow and fast
settings) I think Elder used 2 and 13
Thanks
Jim
The ForceIndex indicator relates price to volume by multiplying net
change and volume.
ForceIndex is calculated using the following equation:
ForceIndex = Volume(today) * (Close(this period) - Close(last
period))
ForceIndex is typically presented as two smoothed averages (slow)and
fast) to reduce the likelihood of false signals.
Interpretation:
ForceIndex is used by some investors as a running total of where
money is flowing. Because this indicator multiplies price movement in
a period by the volume of that period, the value of ForceIndex will
change the most when net change is accompanied by higher relative
volume. Investor can use this index to both (a) compare current price
movements to past ones and (b) evaluate the current trend.
The periods used are a moving average of the ForceIndex values, which
reduces choppiness. Generally, investors use periods which match the
length of the trends in which they are studying. The longer-average
will be the intermediate or longer-term trend and the shorter-average
will be a shorter-term trend. Some conventional interpretations
follow:
One interpretation is to look for a confirmation or divergence
between ForceIndex and the price. When ForceIndex moves up with price
increases or down with price decreases, it can indicate that the
current trend is has momentum. When ForceIndex diverges from price,
it can indicate that the trend may change.
Another interpretation is to receive signals based on a crossover of
the two lines. When the slow line crosses above the slow line and
they are both increasing, it can be considered a confirmation of an
uptrend. Conversely, when the fast line crosses below the slow line
and they are both decreasing, it can be seen as confirmation of a
downtrend. When a crossover occurs when the lines are going in
opposite directions, it can indicate a trend reversal.
Some traders seek to eliminate some false signals by using only the
signals which correspond to the direction of the intermediate to long
term trends.
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