Lopez Efficiency 2.0

75d

Lopez Efficiency 2.0

Your reliable trading semaphor
This indicator analyzes how efficient is the current market movement based on the true high-low ratio of a certain number of bars. It displays how many typical true ranges has the market moved during the desired number of bars. The typical true range is the average true high-low range from the last number of bars, which is later compared with the absolute market movement during the same period of time. The indicator ratio gives you a measure of market efficiency, as a ratio between the range and the market movement.

The ratio is the effectiveness of the market movement
A ratio below 1 means the market is going nowhere
A ratio above 1 means the market is starting to show directionality
A ratio above 2 means the market is showing effective movement
A ratio above 3 means the market moved too much: it will halt or retrace
Zero means the market is not efficient and is going nowhere
It has straightforward trading implications.

Look for positional opportunities when the line is red
Look for range trading opportunities when the ratio is orange
Look for trend trading opportunities when the ratio is blue

When loading the expert to any chart, you will be presented with a set of options as input parameters. Don’t despair if you think they are too many, because parameters are grouped into self-explanatory blocks.

Period
Amount of bars used to calculate the market efficiency.