Type: Oscillator and course detector
The Polarized Fractal Efficiency computes itself just as other momentum - indicators from the closing prices. The Polarized Fractal Efficiency was developed by Hans Hannula. He has fallen back on the findings of the fractal geometry and the chaos theory. The main operational area of the PFE lies in the measurement of the trend efficiency.
Calculation and parameter:
With the calculation of the PFE the length of a straight line which lies between two market prices that are N apart from one another are set into relation with the length of the actual wave-shaped market price movement. In doing so not the course difference is used as with other indicators but a geometrical distance. The length of the distance is determined after the theorem of Pythagoras.
Interpretation:
If the PFE is greater than zero this says that the trend is straightened upward. The higher the value of the PFE is, the more efficient the upward movement is. With the downward movement are the values of the PFE less than zero and the efficiency of the downward movement rises, the further the values under the zero fall. Values near the zero points display a little efficient market price movement and point to a balance of the forces of supply and demand.
Sources:
http:// www.indikatoranalyse.de / pdf / technical_newsletter_2002-01.pdf
Preferences:
Typically 10 and 5 days for the smoothing (EMA)
