Hans Hannula introduced the Polarized Fractal Efficiency (PFE) indicator in the January 1994 edition of Technical Analysis of Stocks & Commodities magazine and its primary purpose is to gauge the market's trendiness or saturation. A negative PFE reading indicates a bear trend, while a positive reading suggests a bull trend. A higher value shows a stronger upward movement, but when a PFE reading is near zero, it signifies a choppy and less efficient market movement.
Typically, a trader enters a trade at the point of maximum efficiency, where the PFE indicates a peak above 50 and a trough at -50, traders should keep a buy trade open until the PFE reaches 50 and a sell trade open until the value drops below -50.
Moving Average Smoothing
An additional feature of the PFE indicator is an added moving average calculation to smooth the line to filter out fake signals, you can turn this smoothing calculation off or on and you can also set the periods (bars back) value in the settings.
How to Trade Using the PFE?
Adjust the top and bottom levels for your trade signals, as default, they are set at 50 and -50, you can experiment with different values for each symbol you are trading. The chart image above shows an example on 27/07/2023 at 14:00 hrs of a sell signal that occurred, there was a strong bearish trend, please note that not all signals like this will produce a 100% signal, use this indicator with other technical and fundamental indicators.
What are Fractals?
Fractals are complex and infinitely repeating patterns that occur naturally or can be generated mathematically and they exhibit the same or similar patterns at different scales. The term "fractal" was coined by mathematician Benoît B. Mandelbrot in 1975, derived from the Latin word "fractus," which means "broken" or "irregular."
Fractals can be found in various natural phenomena, such as coastlines, snowflakes, clouds, ferns, and even in the distribution of galaxies in the universe. They are also used extensively in computer graphics, art, and various scientific fields.
How To Install & Remove
First, make sure you have the cTrader trading platform installed and then unzip the file and double-click on it to automatically install it onto the platform.
Any Questions?
If you have any questions, please first search our product help forum for the answer, if you cannot find it, post a new question.
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