The Efficiency Ratio (ER) is a technical indicator that measures relative trend strength based on changes in close price on different timeframes. It is equal to the ratio of the change in close price over a period to the total sum of changes in close price recorded on the bar-by-bar basis over the same period.
The Efficiency ratio produces values that range from 0.0 to 1.0, higher values possibly indicating stronger trending conditions. Its main plot is accompanied with a fixed trend level: when study values surpass this level, the study indicates that a trend might be currently developing.
||Defines the period upon which the calculations of the total sum and the net change are performed.|
||Defines the minimum value level for the trend to be recognized.|
||The main Efficiency Ratio plot.|
||The minimum trend level.|
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.