ER (Kaufman's Efficiency Ratio)
Kaufman's Efficiency Ratio (ER), also known as the Fractal Efficiency Ratio, measures the efficiency of price movement. It compares the net price movement over a period to the total price movement over the same period. The ratio ranges from 0 to 1. A value close to 1 indicates a strong, efficient trend with little noise, while a value close to 0 indicates a noisy, non-trending market.
Arguments
| Name | Description |
|---|---|
period | number of periods (integer greater than 0). |
Useful Signal Expressions
1. Trending Market
Signal:
er(14).gt(0.7)
Explanation: The Efficiency Ratio is above 0.7, which indicates a strong trending market.
2. Ranging Market
Signal:
er(14).lt(0.3)
Explanation: The Efficiency Ratio is below 0.3, which indicates a ranging or non-trending market.