Elder’s Force Index Signals with Standard Deviation and ATR Exits

Summary

This strategy calculates fast and slow Elder’s Force Index series using exponential averages of price change multiplied by volume, with periods of 13 and 50. Each series is standardized against its own recent average and standard deviation. A long signal occurs when both standardized values exceed the positive threshold; a short signal occurs when both fall below the negative threshold. The defaults include a 50-period standard deviation window and a threshold of two deviations.

The source sets an initial stop using 1.5 times ATR and updates it as price moves, while also maintaining a purported ATR-based trailing target. For long positions, however, the target is repeatedly raised to the current close plus half an ATR; for shorts it is lowered to the close minus half an ATR. This can move the limit away from price rather than lock in a conventional profit target. Daily BTC/USDT futures backtest settings are provided for 2019–2024, but no results are reported. The document notes risks from noisy signals, lag, parameter sensitivity, and trading costs.

Key ideas

• Fast and slow Force Index series use periods of 13 and 50 and are standardized by their recent means and standard deviations.
• Long and short entries require both standardized series to exceed the same positive or negative threshold.
• The initial stop is set at 1.5 ATR from the close and is adjusted as price moves.
• The stated trailing target moves farther from the market as favorable prices advance, which may not secure profits as expected.
• The published daily BTC/USDT futures settings report no performance results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.