Force Index - Indicator Formula

The formula:

FI( t ) = V( t ) * ( C( t ) - C( t - 1 ) )

FIS( ) = Exponential Smoothing of FI( ) to NP.

where:

FI( t ) = pure force index of the current day

FIS( ) = force index with Exponential Smoothing

V( t ) = today's volumes

C( t ) = today's closing

C( t - 1 ) = yesterday's closing

NP = number of periods (single parameter of the indicator)

Two warnings when using this indicator:

1) It's preferable to draw the Force Index as a histogram;

2) Moving Averages can be added to the Force Index to help generate signals; it is preferable to choose an exponential moving average at 2 days, as well as on the one at 13 days: the first one provides excellent levels of input and output, the second one allows you to highlight the long-term trend changes.

Prices moving above the zero-line are seen as positive or could begin a bullish move, while prices moving below the zero-line are seen as negative or could be beginning a bearish move.

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