This indicator describes the market trends through its different direction parameters. This indicator was developed by alexander elder. This indicator calculates the total quantity of the power that is used for the movement of assets price.
Trend Direction and Force index Averages Indicator
It gives result when its direction moves toward positive axis and give negative result when it moves towards negative direction. The positive and negative directions can be defined respectively +1 and -1. It means its value becomes up when its displays profit and also moves down when it shows loss in the market trends. When it reaches on zero it means that the profit and loss both are neutral.
There are two types of directions in this indicator such as the one direction for sellers and other one is for buyers. This indicator is used to define the mixture of price changes and the persons that changes the price. When the directions of this indicator move up it means that the prices are going to up in profit but when the directions move down then its means that there are chances of low price that can cause loss.
F1 (1) = (CCP – PCP) * VFI (13)
13-Period EMA of FI (1)