How to Set Kaufman Efficiency Ratio on MetaTrader 4 Charts
Step 1: Open the Navigator Window on Trading Software Platform
Open the Navigator window just as shown and illustrated below: Go to the 'View' menu (press on it), then select 'Navigator' window (press), or From Standard Toolbar click the 'Navigator' button or press key board short-cut keys 'Ctrl+N'
On Navigator panel, choose 'Indicators', (DoublePress)
How to Add Kaufman Efficiency Ratio on MT4 Platform - MT4 Kaufman Efficiency Ratio Indicator
Step 2: Expand the Indicators Menu on the Navigator - Adding Kaufman Efficiency Ratio MT4 Indicator
Expand this menu by pressing the enlarge(+) tool/button mark point '+' or doubleclick the 'indicators' menu, afterwards this particular specified button will appear and be shown as (-) & will now display a list like is shown below - select the Kaufman Efficiency Ratio chart indicator from this list of indicators so that to add the Kaufman Efficiency Ratio to the chart.
How to Add Kaufman Efficiency Ratio - From the Above window you as a trader can then place Kaufman Efficiency Ratio that you as a trader want on the chart
How to Set Custom Kaufman Efficiency Ratio to MT4
If the indicator you want to add is a custom indicator - for example if the Kaufman Efficiency Ratio you as a trader want to add is a custom indicator you'll need to first add this custom Kaufman Efficiency Ratio on the MetaTrader 4 software and then compile the custom Kaufman Efficiency Ratio so that as the newly added Kaufman Efficiency Ratio custom indicator pops up on the list of custom technical indicators on MT4 platform.
To learn how to install Kaufman Efficiency Ratio indicators in the MT4 Platform, how to add Kaufman Efficiency Ratio panel to MT4 and how to add Kaufman Efficiency Ratio custom indicator on MetaTrader 4 Platform - How to add a custom Kaufman Efficiency Ratio in the MT4 Software.
About Kaufman Efficiency Ratio Tutorial PDF
Kaufman Efficiency Ratio Forex Analysis Signals
Created and Developed by Perry Kaufman. Described & Explained in his book entitled "New Systems and Techniques and Methods".
The Kaufman Efficiency measures the ratio of the relative market speed in relation to the volatility. Kaufman efficiency is oftenly used by the traders as a filter to help avoid trading when the market is "choppy" or flat ranging markets. The indicator also helps to identify smoother price trends. This is an oscillator trading indicator that oscillates between +100 & -100, where zero is the center point. +100 is upward trending market and -100 is downward trending markets.
Kaufman Efficiency Ratio
The Efficiency indicator is calculated by dividing the overall net change of the price movement over an n-number of periods by the sum of all the bar to bar market price changes which is taken as absolute values over these same n-periods.
FX Analysis and How to Generate Trading Signals
Kaufman is used to generate trading signals as follows:
The smoother the manner formation in which the market is trending then the greater the Efficiency Ratio shown by the indicator. Efficiency Ratio values of around zero reflect a lot of market inefficiency or "choppiness" in the price trend movements (ranging markets).
- If the Efficiency Ratio shows a reading of +100 for a forex pair, then that currency pair is trending upwards with perfect efficiency.
- If the Efficiency Ratio shows a reading of -100 for a currency pair, then that currency is trending downwards with perfect efficiency.
However, it's almost impossible for a market trend movement to have perfect efficiency ratio since any price retracementpullback movement against the current trend direction during the trading time period that is being used to calculate the indicator would decrease the efficiency ratio.
Bullish/Buy Trading Signal
Efficiency Ratio values above +30 show a smoother uptrend.
Buy signal is generated/derived above center line mark.
Buy Trading Signal
Bearish/Sell Trade Signal
Efficiency Ratio values below -30 show a smoother down-trend.
Sell Signal is generated/derived below zero center line mark.
Sell Signal
However, it's good you experiment with other values to determine the most appropriate levels for the forex currency pair being traded and the value that is the best for your technique that you're using.
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