A Practical Guide to Swing Trading by Larry Swing
SwingTracker
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8.8 Force Index
Force Index is an oscillator developed by Dr. Alexander Elder in his excellent book:
“Trading for a Living”.
Force Index combines the three most essential pieces of market information:
the direction of price change
its
extent
its trading volume.
It provides a new, practical way of using volume to make trading decisions.
Force Index
Force Index = Volume(today) * (Close(today) - Close(yesterday))
Although Force Index can be used raw, I prefer
to smooth them with moving
average:
Larry’s Index
FI-3days MA & FI-13days MA
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http://www.mrswing.com/
or email: larry@mrswing.com
A Practical Guide to Swing Trading by Larry Swing
A 3-day MA of Force Index is a very sensitive indicator
which shows the short-term
battle between the bulls and the bears. And the 13-day MA of Force Index identifies
the longer-term battle between bulls and bears.
Force Index
BUY opportunity :
FI-13MA => 0
FI-3MA <= 0
UPTREND
SELL opportunity:
FI-13MA =<0
FI-3MA >= 0
DOWNTREND
0>
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