Understanding the Basics:
The Efficiency Ratio (ER) was introduced by Perry Kaufman in his 1995 book, ‘Smarter Trading.’ It measures the price change over a specific period by comparing it to the total price movements that led to that change. The ER ranges from 0 to 1, where higher values indicate a more efficient or trending market. Sometimes referred to as Fractal Efficiency, this tool helps you distinguish between trending and sideways market conditions.
What’s New in This Version:
The traditional Efficiency Ratio doesn’t provide insights into market direction. This upgraded version does just that! We’ve added self-adjusting levels to help you easily identify shifts in market conditions, making it simpler to gauge the current state of play.
How to Use It:
Keep an eye on the color changes to evaluate market direction and trend shifts effectively.
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