Kaufman Efficiency Ratio Expert Advisor Setup - Setting Up Kaufman Efficiency Ratio Expert Advisor
Kaufman Efficiency Ratio Expert Advisor Setup - Setting Up Kaufman Efficiency Ratio Expert Advisor - A trader can come up with an Kaufman Efficiency Ratio Expert Advisor based on the Kaufman Efficiency Ratio indicator explained below.
Kaufman Efficiency Ratio Expert Advisor rules can be combined with other technical indicators to come up with other EA Robots that trade using rules based on two or more indicators combined to form a system.
Kaufman Efficiency Ratio FX Analysis Signals
Developed by Perry Kaufman. Described in his book entitled "New Systems & Techniques".
The Kaufman Efficiency measures the ratio of the relative market speed in relation to volatility. Kaufman efficiency is often used by traders as a filter to help avoid trading when the market is "choppy" or flat ranging markets. The indicator also helps to identify smoother forex market trends. This is an oscillator indicator that oscillates between +100 & -100, where zero is the center point. +100 is upwards trending market & -100 is downward trending markets.
Kaufman Efficiency Ratio - Forex Kaufman Efficiency Ratio EA Setup
The Efficiency indicator is calculated by dividing the net change in price movement over an n number of periods by sum of all the bar-to-bar price changes taken as a absolute values over these same n periods.
Forex Analysis & How to Generate Signals
The Kaufman is used to generate signals as follows:
The smoother the manner in which the forex market is trending then the greater the Efficiency Ratio shown by indicator. Efficiency Ratio value readings of around zero indicate a lot of inefficiency or "choppiness" in the trend moves (ranging forex markets).
- If the Efficiency Ratio shows a reading of +100 for a currency pair, then that ##forexforex pair is trending upward with perfect efficiency.
- If the Efficiency Ratio shows a reading of -100 for a forex pair, then that currency is trending downward with perfect efficiency.
However, it is almost impossible for a market trend to have a perfect efficiency ratio since any retracement movement against the current trend direction during the time period being used to calculate the indicator would decrease the efficiency ratio.
Bullish/Buy Signal
Efficiency Ratio values above +30 indicate a smoother uptrend.
Buy signal gets generated above center-line mark.
Buy Signal - Forex Kaufman Efficiency Ratio EA Setup
Bearish/Sell Signal
Efficiency Ratio values below -30 indicate a smoother downtrend.
Sell Signal gets generated below zero center-line mark.
Sell Signal - Kaufman Efficiency Ratio EA Setup
However, it is good you experiment with other values to determine the most appropriate levels for the forex pair being traded and the value that's the best for your Forex technique that you're using.
