Understanding the Range Expansion Index (REI) in MetaTrader 4 — The Range Expansion Index is a relative oscillator that helps traders gauge the speed of price changes. It provides vital signals for overbought and oversold conditions, especially when the price shows signs of strength or weakness. Developed by Tom DeMark, this indicator is detailed in his book, The New Science of Technical Analysis. The REI operates on a scale from -100 to +100, making it a reliable tool for identifying market conditions.
How the REI Works
The REI stands out as an advanced oscillator because it tends to maintain stability during range-bound markets, issuing signals primarily when significant peaks or troughs are detected. You can easily download the REI for both MT4 and MT5 platforms.
Input Parameters for the REI
- REI_Period (default = 8) — This indicates the period for the indicator. Increasing the value will yield fewer but more accurate signals, while decreasing it will generate more signals that may be less reliable. It’s best to stick with the default setting.
- EnableNativeAlerts (default = false) — Set this to true to receive MetaTrader's native pop-up alerts when the REI crosses above level 60 or below level -60.
- EnableEmailAlerts (default = false) — Toggle this to true if you want to receive email alerts when the REI crosses those key levels. Ensure your email settings are configured in MetaTrader through Tools -> Options -> Email.
- EnablePushAlerts (default = false) — Set this to true for push notifications to your device when the REI crosses level 60 from above or level -60 from below. Make sure notifications are set up correctly in MetaTrader via Tools -> Options -> Notifications.
- TriggerCandle (default = Previous) — This defines which candle will trigger alerts: Previous refers to the most recently closed candle, while Current refers to the candle that is still forming.
Tom DeMark recommends using the default period of 8 for optimal results. A bearish signal is triggered when the price rises above level 60 and then falls below it. Conversely, a bullish signal occurs when the price dips below level -60 and later rises above it. While I find oscillators like the REI can be a bit hit-or-miss, they can be quite handy on lower timeframes.
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