Oscillators
Force Index
Combines how far the price moved with how much was traded, to show the force behind a move.
The idea in plain words
A big price change on heavy activity is a forceful move; the same change on light activity is weak. Force Index multiplies the change by the volume.
How it is calculated
Each candle: the change in close multiplied by volume, then smoothed with a 13-period average.
Force = (close − previous close) × volume
Force Index = MA(Force, 13)How to use it
- Above zero: buyers have the force; below zero: sellers.
- In an uptrend, dips of Force Index below zero can be buying chances.
Drawing conclusions
- New highs in price without new highs in Force Index suggest the move is running out of fuel.
Example
A stock rallies on rising volume and the Force Index reaches its highest level in months: a strong, well-supported move.
Prices in examples are illustrative.
Watch out for
- Uses tick volume for currencies and CFDs.
A little history
Dr Alexander Elder, "Trading for a Living" (1993).
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.