Elders Force Index

Elder’s Force Index is an indicator that helps to assess who is currently dominating the market: buyers or sellers.

The developer of this indicator is Alexander Elder, a well-known trader and author of popular books on trading.

The following parameters are evaluated in the Force Index indicator calculation algorithm:

• Direction of price movement

• The amount of price change for a certain period

• Trade volume

The Elder Force Index provides an indication of which direction the market is moving. If the indicator line is in the area above 0 and shows the next maximum, this indicates an upward trend and the dominance of “bulls.” If the Elder’s Force Index falls below 0 and forms local minimums, the market is in a downward trend and “bears” set the tone.

The Force Index indicator is built in a separate window directly below the price chart and consists of one main line and the central level 0.

To improve results, Elder recommended averaging the Force Index values using the Exponential Moving Average (EMA). Therefore, the formula for calculating the indicator values appears as follows:

FORCE INDEX = EMA ((Pn – P(n-1)) * VOLUME)

• ЕМА is Exponential Moving Average.

• Pn is closing price of the current candle.

• P(n-1) is closing price of the previous candle.

• VOLUME is volume of the current candle.

Indicator settings

Parameters

Name	Description
Period	The time period to be used in the calculation is 13 by default. The author recommends using two periods: 2-day for short-term trading, and 13-day for medium-term trading.
Type of MA	Defines the type of moving average for calculating the indicator; Elder recommends using Exponential (EMA).
Source	The required price type is indicated here. By default, the closing price of candles is used (Close).

Charts

Name	Description
Chart	Enable or disable display of the chart.
Marker	Enable or disable display of the marker.
Chart type	Selection of the type of chart.
Split color	Possibility of splitting the color in the chart.
Color	Selection of the chart color.
Line width	Selecting the chart line width.
Line style	Selecting the chart line style.

Levels

Name	Description
Levels	Possibility of creating several levels.

Indicator

Name	Description
Indicator	Enabling or disabling the indicator display on the chart.
Name	Enabling or disabling the indicator name display in the information line.
Values	Enabling or disabling the indicator value display in the information line.
Markers	Enabling or disabling the indicator markers display on the scale.
Calculation	Select when the calculation will be performed.
Area	Selection of an area to display the indicator.