Force Index Technical Indicator [Oscillator]

Force Index (FRC) — технический индикатор, использующийся в том числе и The name of the book was developed by the famous Alexander Elder. As it is not difficult to judge from the name, FRC indicator measures the strength of the bulls and bears on the rise and fall of the stock movement of a selected asset respectively, thereby linking the price of the asset, its direction, change in dynamics and transaction volumes.

FRC indicator is standard for MetaTrader 4 trading terminal.

Using the Force Index indicator

Force Index Technical Indicator is quite often used by stock traders as an independent filter, but it is often recommended to smooth it out with the Moving Average indicator. Smoothing with short moving average (period 2-10) helps to determine the most successful moments to enter the market and close the deal. Smoothing with long MA indicator (from period 13) contributes to a better display of the Power of Change trend index.

Force Index indicator trading signals

A signal to buy occurs when the value of FRC technical indicator during an upward trend. If Force Index indicator showed a new maximum, then we are talking about the growth of bullish sentiment and a further uptrend.

Signal to sell occurs in the opposite situation: when a negative value of FRC indicator The downtrend continues. Showing a new low, it shows the strength of the bears and the continuation of the decline in the price chart.

If the new price changes of the selected asset have not been supported by a corresponding change in FRC indicatorthen we should expect reversal of the current trend.

The formula for calculating the Force Index indicator

The strength of the directional movement of the market is determined by its volatility and the volume of transactions. If the closing price of the current bar is higher than the previous bar, we have an uptrend and, as a consequence, a positive value Force Index indicator. In the opposite case, the value of the strength indicator will be negative. The greater is the difference in closing prices of neighboring bars, the stronger is the strength of the trend. In addition, the growth of volume of transactions also directly proportionally affects the growth of power indicator.

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

Where:

— FORCE INDEX (i) – значение силы текущего бара;
— VOLUME (i) – объем совершенных сделок текущего бара;
— MA (ApPRICE, N, i) — любая moving average current bar for N periods: simple, exponential, weighted or smoothed;
— ApPRICE — примененная цена;
— N — период сглаживания;
— MA (ApPRICE, N, i-1) — любая скользящая средняя предыдущего бара.