Force Index

The «Force Index« or, as traders call it, FRC (ForceIndex) is an indicator of technical analysis. The authorship belongs to Alexander Elder. The indicator is not classic, however, it is included in the standard set of popular Forex MetaTrader 4/5 platforms.

The first use of the indicator began in the 90s. After successful testing, Elder made it public.

Advantages:

  • – Takes into account prices and volume. Moreover, the volume of an individual candle adds weight to the current trend;
  • – Smoothing the moving average, with a period of more than 5, accurately determines the current trend;
  • – A period of less than 5 helps determine entry/exit points.

Relative Force Index created for the stock and commodity markets. This is because FRC uses volume metrics. It is the stock and commodity markets that give the exact volume.

For other markets, its use is minimized. The main reason is inaccurate volume data. For example, in the Forex currency market, only tick values are available, instead of real data.

Trading strategies based on FRC, built a huge number. The classic interpretation is as follows:

  • – When the FRC values are above the zero level – the trend is «bullish»;
  • – Below zero – the trend is clearly «bearish»;
  • – Channel building – allows getting a «flat zone».

The indicator works great in long-term Forex strategies hen orders are opened for a long time. However, several «scalping» strategies use the strength index.