Author: iliko
The Fractal Dimension Index (FDI) is a powerful tool that helps traders gauge market volatility. If you’re looking to enhance your trading strategies, this indicator can be a game-changer.
So, how do you use the FDI? It’s pretty straightforward! A reading of 1.5 indicates that the market is behaving randomly. When the value deviates from 1.5, it signals potential profit opportunities – the greater the deviation, the higher the chance for profit. However, keep in mind that the FDI doesn’t reveal the trend direction!
In trending markets, the indicator will show up in red, while during periods of high volatility, it switches to blue. If you notice a color change from red to blue, that’s your cue that the trend is coming to an end and the market is entering a more chaotic phase with increased volatility. Typically, these transitions are short-lived and often lead to the emergence of a new trend.
The activation of this indicator can be fine-tuned using the following input parameter:
input double e_random_line=1.5; // Level of triggering
Originally developed in MQL4, the FDI was first published in the Code Base at mql4.com on January 24, 2008.
Figure 1. Fractal Dimension Index
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