Polarized Fractal Efficiency is a technical indicator that displays the current market prices efficiency. Indicator values oscillate at the interval from -1 to +1, the central line passes through 0 level. It is assumed that a trend is descending, in case the indicator value is positive. And it is ascending, in case the indicator value is negative.
It is recommended to buy when the indicator value falls below -0,5. And it is recommended to sell when the indicator value rises above +0,5.
This indicator allows to select the smoothing type of the initial XCVO histogram and its signal line out of ten possible versions:
- SMA – simple moving average;
- EMA – exponential moving average;
- SMMA – smoothed moving average;
- LWMA – linear weighted moving average;
- JJMA – JMA adaptive average;
- JurX – ultralinear smoothing;
- ParMA – parabolic smoothing;
- T3 – Tillson’s multiple exponential smoothing;
- VIDYA – smoothing with the use of Tushar Chande’s algorithm;
- AMA – smoothing with the use of Perry Kaufman’s algorithm.
It should be noted that Phase type parameters for different smoothing algorithms have completely different meaning. For JMA it is an external Phase variable changing from -100 to +100. For T3 it is a smoothing ratio multiplied by 100 for better visualization, for VIDYA it is a CMO oscillator period and for AMA it is a slow EMA period. In other algorithms these parameters do not affect smoothing. For AMA fast EMA period is a fixed value and is equal to 2 by default. The ratio of raising to the power is also equal to 2 for AMA.
The indicator uses SmoothAlgorithms.mqh library classes (must be copied to the terminal_data_folder\MQL5\Include). The use of the classes was thoroughly described in the article “Averaging Price Series for Intermediate Calculations Without Using Additional Buffers”.
This indicator was first implemented in MQL4 and published in CodeBase at mql4.com 22.08.2008.
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