Author: Gimapiero Raschetti
The Polarized Fractal Efficiency (PFE) indicator is a powerful tool that helps traders gauge market price efficiency. This nifty indicator oscillates between -1 and +1, with the central line cutting through the 0 level. A positive value suggests a downward trend, while a negative value indicates an upward trend.
As a rule of thumb, consider buying when the indicator dips below -0.5, and look to sell when it climbs above +0.5. This can help you make more informed trading decisions!
What’s cool about this indicator is that it allows you to choose from ten different smoothing types for the initial XCVO histogram and its signal line:
- 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 Using Tushar Chande's Algorithm;
- AMA - Smoothing Using Perry Kaufman's Algorithm.
It’s important to note that the Phase type parameters vary significantly across different smoothing algorithms. For instance, in the JMA, the external Phase variable ranges from -100 to +100. When it comes to T3, the parameter is a smoothing ratio multiplied by 100 for clarity. Meanwhile, for VIDYA, it’s the CMO oscillator period, and for AMA, it’s a slow EMA period. In other algorithms, these parameters don’t influence the smoothing process, while AMA keeps a fixed fast EMA period set to 2 by default. The raising power ratio is also set to 2 for AMA.
To implement this indicator, you’ll need to use the SmoothAlgorithms.mqh library classes (make sure to copy them to the terminal_data_folder\MQL5\Include). There’s a detailed explanation of how to use these classes in the article "Averaging Price Series for Intermediate Calculations Without Using Additional Buffers".
Originally developed in MQL4, this indicator made its debut on CodeBase on August 22, 2008.
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