Efficiency Ratio Direction and Level - MetaTrader 5 Script | Trading Script Download - MT4/MT5 Resources

Efficiency ratio (ER) was originally proposed by Perry Kaufman in his work. In 1995, he published the book "Smart Trading". It is calculated by dividing the price by the absolute sum of the price changes over a period of time that would have occurred in order to effect that change. The resulting ratio ranges from 0 to 1. Higher values ​​represent more efficient or trending markets. Kaufman efficiency ratio is also called fractal efficiency. It can be used as a filter to differentiate between trending conditions and sideways markets.

The original efficiency ratio does not indicate the direction of the market. This version does just that. In addition, in order to identify market conditions, self-adjustment levels have been added to make it easier to detect changes and current status of the market.

You can use color changes to evaluate market direction and trend changes.

Attachment download

📎 efficiency_ratio_directional_levels.mq5 (12.11 KB)

Source: MQL5 #22700